The administrator of stricken state-owned Mango Airlines (MNO, Johannesburg O.R. Tambo) is engaging with parent South African Airways (SA, Johannesburg O.R. Tambo) to access an outstanding state allocation of ZAR399 million rand (USD29 million) to implement the carrier's business rescue plan. The money has been released to the mother firm but only after the administrator threatened legal action against an apparent reluctant minister of public enterprises.

In his latest monthly status report to creditors, Mango’s administrator Sipho Sono of SNG Grant Thornton said he had to call on Finance Minister Enoch Godongwana to intervene and had to resort to legal warnings to get Public Enterprises Minister Pravin Gordhan to release the balance of the outstanding funds. He said correspondence to Gordhan on March 14 to release the funds by March 18 or face legal action had fallen on deaf ears.

On March 25, Sono had asked Godongwana to intervene "as the delays are jeopardising the investor process which is already at an advanced stage”, failing which he would have been left with no choice but to file papers with the South African High Court demanding payment, he said.

On March 31, Sono was informed by SAA that the funds had been paid into its account on that date. “Accordingly, the BRP will be engaging with SAA to access the funds as a matter of urgency,” he said.

Mango was allocated ZAR819 million (USD53.4 million) from a ZAR10.5 billion (USD685 million) state bailout granted to SAA by way of a Special Appropriation Act. The funding is to help cover its debt and pay for its restructuring. The company entered voluntary business rescue on July 28, 2021, after it was heavily impacted when its parent went into business rescue in December 2019 and by the ensuing COVID-19 pandemic. When it entered administration, its debt burden stood at ZAR2.8 billion (USD182.7 million) with forward sales liability and un-flown ticket liability of ZAR183 million (USD11.9 million).

As things stand, Mango has been mothballed because SAA - which has since exited administration as a substantially reduced airline - has decided to sell off the wholly-owned subsidiary.

Giving an update on the new investor process, Sono said the deadline for the submission of binding offers from interested parties had been extended to April 7, 2022, at the request of bidders.

The time-line for the investor process now is as follows:

  • April 21: Selection of preferred bidder;
  • April 22 through May 6, 2022: Negotiation and execution of the transaction agreement;
  • End April to end May 2022: Preparation and submission to the South African Parliament to approve the sale in terms of
    applicable legislation and Mango's "Significance and Materiality Framework" (SMF) agreed between Mango and its executive authority;
  • Within 60 business days of filing: Regulatory approval from South Africa's Competition Commission.

The sale would be effective on fulfilment of conditions precedent in the transaction agreement, Sono said.

Should no suitable offers be received, he would have to wind down the company as prescribed in its business rescue plan. Still, he maintained there was reasonable prospect of rescuing Mango, which would result in a better outcome for creditors than should the company be liquidated.