South African Airways budget carrier, Mango Airlines is on the verge of collapse,
The Citizen reports that the airline is still facing financial difficulties and has been instructed not to proceed with the business rescue plan published at the end of October to keep the carrier alive until a strategic equity partner is found.
The latest setbacks to the return of air travel for Mango Airlines are stoking concern that a cash crunch is about to bear down on the airline with all 709 jobs now on the line.
A business rescue plan published on October 29, 2021, suggests that the airline should seek private investment as its parent company SAA was not in a position to allocate more funds as reported by business rescue practitioner Sipho Eric Sono of consultancy SNG Grant Thornton, advised on October 6 by SAA.
The business rescue plan also provided that Mango Airlines resume flight operations in December 2021 as well as seek an investor option or, alternatively the company should be wound down.
“Having established that Mango will not form part of the SAA Group, the administrator has determined that for Mango to be rescued and for it to remain sustainable into the future, the company requires an investor that would fund ongoing operations beyond its restructuring. This business rescue plan, therefore, proposes that the company be sold to an interested investor.” Should an investor not be secured, the administrator proposes that Mango be wound down.
Mango has been in voluntary business rescue since July 28, 2021, after it was severely affected by South Africa’s hard COVID-19 lockdown in 2020 and the inability of SAA, at the time in bankruptcy protection as well, to help fund its operations.
In early 2021, the South African government provided more than US$700 million to bail out South African Airways. Around US$57 million was meant to find its way to Mango Airlines. But that money never flowed through.
“It has always been my understanding and intention that the purpose for the utilization of the R819 million (US$57 million) would include Mango resuming operations. This has been consistently communicated to SAA and the Department of Public Enterprises,” said Sipho Sono in a November 4 letter to Professor Lamola.
“A letter from SAA to the DPE on October 26 also suggests that SAA, at least on the date of the letter, also understood the funds would be used to fund restructuring and working capital.”
By Victor Shalton Odhiambo
Photo: by @aviator_nic
