The hard sell by Mango Airlines’s Business Rescue Practitioner (BRP) to the Portfolio Committee on Public Enterprises on the low-cost carrier being able to take to the South African skies by December went down like a lead balloon yesterday.
MP Jeanette Komane said: “There is not much confidence that Mango will be back in the skies by December."
The Committee tore apart the optimistic BRP Sipho Sono’s promise to bring a private sector partner to the party that would purchase a 100 percent in the state-owned carrier, which has not turned a profit since 2018.
Mango also has no assets to boost confidence in returning to the market, except for its brand value.
So far, the name of an investor has not been revealed, despite an update published by the BRP in September, where Sono said Mango’s preferred bidder had provided all the necessary information required to make an official deal and that the sale was now only subject to the approval of a change of ownership of Mango’s air services licences by the Air Services Licensing Council (ASLC), notification of the transaction to the Competition Commission, and approval from the Department of Public Enterprises (DPE) and SAA.
The DPE has so far spent R734 million on the business rescue process of the bankrupt airline.
But members yesterday were unconvinced of the airline’s attraction to a prospective investor, which would have to undergo rigorous due diligence by the government as the carrier’s major shareholder.
They also questioned the end game for the airline if the BRP failed to secure a suitable investor. This is in addition to the settlement of claims against the airline.
The airline owes about R2.8 billion in liabilities in addition to R130 million in floating liabilities of ticket refunds owed to passengers when the airline was grounded.
MP Jabulile Mkhwanazi asked Professor John Lamola, SAA’s executive chairperson and chief executive: "Mango's asserts are substantially less than R2.1 billion. It will fail to pay its creditors. It leases and does not own aircraft. The private sector is not interested in buying unprofitable state-owned enterprises. Will you then request funding from government if the investor does not come through?"
Lamola also said Mango risked losing its profitable routes and that there was "a scramble for air licensing rights", especially those historically played by Mango and SAA, which they could not sustain now.
Legislators also highlighted concerns about the hurdles facing a potential investor as Mango's operator's licences have not been renewed since the entity went into business rescue in 2021, while the airline's regular updates to regulatory authorities had not been updated as well.
Lemola said that the licences were suspended for 24 months, pending clarity with the business rescue process. Mango would have to retain the routes and the licenses through ongoing engagement with the relevant authorities, including the ASLC, which Lamola said was no walkover.
However, although the BRP responded that it was not a serious threat to the new bidder, Lamola said it was a risk.
Members raised concerns that timelines for Mango taking to the skies would be bogged down in administrative red tape, including the Public Finance Management (PFMA) act approvals, Competition Commission consideration and the ASLC processes.
MPS were also concerned that the Takatso Consortium and SAA deal was structured as a baton to bludgeon Mango down in favour of LIft Airways, which was part of the package the Takatso deal came with.
BUSINESS REPORT