An anonymous bidder has purportedly shown proof of funding for South Africa’s troubled Mango Airlines. The nation’s budget carrier, which is well known for its bright-coloured and bold orange fleets, went into voluntary business rescue in July 2021, and had ceased operations since then.
Background
Upon halting operations, the airline owed R2.86 billion ($170.4 million) to creditors and an additional R183 million ($10,9 million) in un-flown ticket liabilities. Mango suffered heavily after its parent company, South African airlines, fell into debt in late 2019. The parliament thus agreed to allocate R819 ($48.5 million) to assist in the initiation of a company rescue plan, which centered around securing an investor who would buy and rebrand the airline. The investor, along with a litany of other requirements, would need to have at least R200 million ($11,9 million).
This plan has not gone smoothly, and its rollout is very reminiscent of South African Airlines’ fight to stay alive. For starters, creditors amended the plan a few times, notably in November 2021, when it was decided that the winning bidder would own all shares in the company and would be required to ensure funds were concurrently available to pay creditors. Then later in May 2022, Sipho Sono, Mango Airlines’ business rescue practitioner, threatened to take the government to court after failing to release the funding they had promised to Mango. Despite all odds, however, there appears to be hope.
The announcement
In a status update to the airline’s creditors, Sono stated that the bidder had offered ‘adequate proof funding in the form of a bank confirmation’ and that the company was one step closer to finalizing agreements. He also noted how in order to proceed, the bidder had until August 10th of this year to offer a bank guarantee for the full purchase price of the airline.
The reserve bidder
In the run-up to this latest update, there had been two worthy contenders for Mango Airlines. As part of the amended plan, Sono remarked that,
“In the event that the preferred bidder is unable to fulfil the conditions of the transaction agreements, the reserve bidder will be approached to conclude the transaction.’
If both bidders fail to meet the requirements, Sono will be forced to liquidate Mango Airlines.
A few commentators are unsure about the legitimacy and potential of this venture and are quite justified in their pessimism. Furthermore, the recent suspension of Mango airline’s licenses “for a period of two years, effective immediately” will undoubtedly have a negative impact on negotiations and damage the rescue plan.
Although, it would be a shame to see this affordable, flamboyant and cheery air carrier dissolve into the sky.
