The proposed sale of Mango Airlines (MNO, Johannesburg O.R. Tambo) appears to be in jeopardy after South Africa's Public Enterprises Minister Pravin Gordhan withheld his approval within a 30-day deadline due to unanswered questions raised by parent South African Airways (SA, Johannesburg O.R. Tambo).
In his latest update to creditors of the state-owned budget carrier, provisional liquidator Sipho Sono said, "given this sudden turn of events, there is now the possibility that the transaction or investor process […] may have to be abandoned and for the business rescue practitioner to implement the wind-down process that is already incorporated in the adopted business rescue plan". Mango has not flown since it entered voluntary administration in July 2021.
It appears that Gordhan refused to sign off on the deal as he was dissatisfied with certain responses to queries raised by SAA, and that the sale application would now have to be resubmitted to the National Treasury. Sono said he was currently considering "whether the issues raised are capable of resolution and feedback in respect hereof will be provided to affected parties in due course".
SAA first applied to sell Mango on September 30 but raised some undisclosed areas of concern. These were addressed, and Sono resubmitted the application to Gordhan on November 28, who had until December 28 to make a decision. However, according to Sono, "the Minister is yet to make a decision on the application".
"We understand that the Minister wrote to SAA on or about December 20, 2022, expressing a view that he was not completely satisfied with the responses to the queries that were raised by SAA. We further understand that SAA was also meant to receive a letter from National Treasury, communicating National Treasury's view that the application will have to be resubmitted directly to National Treasury, and until that happens, National Treasury does not believe that the submission of the application to DPE [Department of Public Enterprises] is complete."
According to South Africa's Public Finances Management Act (PFMA), a lack of response within 30 days is "deemed approval". However, a mutual agreement between SAA and the DPE (the SAA significance and materiality framework) provided another 30-day extension to January 28.
Sono said he was not given copies of the DPE and National Treasury letters referenced above. However, following an SAA board meeting on January 10, he was given a letter from SAA dated January 11, summarising the DPE and National Treasury's concerns. He was now considering whether the issues raised could be solved.
