In the midst of a takeover process, Mango Airlines is surprised by the expiry of its licences
Due to financial and operational problems, Mango Airlines entered into voluntary restructuring on 10 August 2021. Since then, the low-cost subsidiary of South African Airways (SAA) has been in the process of privatisation.
It was thought that the end of the tunnel for the takeover of Mango Airlines was in sight, after a potential buyer provided proof of financial capacity. However, this is not the case as the Air Services Licensing Board has suspended both of the carrier's licences with immediate effect for a period of two years under the Air Services Act. The reason being that it has suspended flights for more than twelve months; since 27 July 2021.
"The decision was communicated to me on Friday night, so I still have to think carefully and decide on the next steps," the South African Airways low-cost rescue manager told Fin24 on Sunday 7 August 2022. "All I can say is that this is a very strange decision, which does not take into account the lack of competition in the domestic aviation market, with ticket prices that have exploded," Sipho Sono added.
The suspension of licences comes after the company's bailout manager and a consortium signed a share subscription agreement on 28 July. The consortium had only to provide a bank guarantee equivalent to the full purchase price of Mango by 10 August.
"The Ministry of Public Enterprises has indicated in the past that Mango could not resume operations until it found an investor. Now that we are about to finalise the agreement, the same ministry is closing Mango," Mr Sono lamented.
As a reminder, in 2019 (before the Covid-19 pandemic), Mango Airlines made an operating profit of ZAR 977.5 million (USD 63.8 million). But in 2020, its profit dropped drastically to ZAR462.8 million (USD30.2 million). As of 19 April 2021, its total debt was estimated at R2.5 billion ($168.4 million).
