The investor process of Mango Airlines (MNO, Johannesburg O.R. Tambo) has "progressed substantially", with an unnamed preferred bidder having provided the necessary confirmation of funds, says the state-owned airline's administrator.

To expedite regulatory approval processes, administrator Sipho Sono and the preferred bidder would now immediately start engaging with South Africa's Air Services Licensing Council (ASLC) to gain approval for the change of ownership. This would also facilitate lifting the suspension of Mango's domestic licenses, Sono said in his latest status report to creditors.

Next, parent South African Airways (SA, Johannesburg O.R. Tambo) would need approval for the sale from its shareholder, the South African government, in terms of the country's Public Finance Management Act. Sono said he would compile an application and submit it to the relevant parties for consideration and approval. He would further engage with the Department of Public Enterprises (DPE) and SAA to agree on the following steps and any announcements to be made in due course.

South Africa's Competition Commission would also have to approve the transaction.

Sono said he had engaged extensively with the bidding consortium to ascertain whether it had:

  • sufficient working capital and availability of funds to resume operations;
  • adequate skills to operate an airline;
  • plans for securing aircraft; and
  • a route network and expansion plan.

The unnamed consortium had been given an August 10 deadline to provide a bank guarantee for the full purchase offer, which was not disclosed. Mango's amended business rescue plan of November 2021 stipulates the winning bidder will acquire all shares in the company "for a nominal consideration".

In terms of the business rescue plan, concurrent creditors will receive almost nothing - an initial settlement estimated at ZAR0.04 (USD0.002) on the rand - following a so-called payment waterfall. The balance of their claims will be ceded to the investor at face value for a nominal consideration. The investor will convert the debt into equity to restore the company to solvency.

After presenting its offer, the consortium, on July 28, executed a share subscription agreement that allowed it to subscribe to shares in Mango. Sono previously disclosed the preferred bidder would be funded by its offshore partners.

Apart from its licenses, currently suspended for two years, Mango's only asset of value was a spare engine.

The low-cost carrier has not operated a commercial flight since July 26, 2021, falling short of South Africa's Air Service Licensing Act requirements as it had not used its licensed air services for an uninterrupted period exceeding 12 months. Still, Sono told creditors the conclusion of Mango's investor process would allow it to meet the conditions of the licenses. Mango would apply to have the licences amended, whereafter the suspension should be lifted, he said.