An anonymous bidder reportedly presented evidence of funding for struggling Mango Airlines in South Africa. The country’s low-cost carrier, which is well known for its bold, bright orange fleets, embarked on a voluntary business rescue in July 2021 and has since ceased operations.
When operations ceased, the airline owed 2.86 billion rand ($170.4 million) to creditors and another 183 million rand ($10.9 million) in unstolen ticket liabilities. Mango suffered badly after its parent company, South African airlines, ran into debt at the end of 2019. Parliament agreed to allocate 819 rand ($48.5 million) to help launch a recovery plan. rescue of the company, centered on securing an investor who would buy and rebrand the airline. The investor, along with a litany of other requirements, would need at least 200 million rand ($11.9 million).
This plan did not go smoothly and its deployment is very reminiscent of South African Airlines’ fight to stay alive. For starters, creditors changed the plan a few times, including in November 2021, when it was decided that the winning bidder would own all of the shares in the company and would be required to ensure that funds were simultaneously available for pay creditors. Then later in May 2022, Mango Airlines business rescue practitioner Sipho Sono threatened to sue the government after it failed to release the funding he promised Mango. Despite all the obstacles, however, there seems to be hope.
In an update on the status of the airline’s creditors, Sono said the bidder had offered “adequate evidence funding in the form of bank confirmation” and the company was close to finalizing the terms. agreements. He also noted that to proceed, the bidder had until August 10 this year to offer a bank guarantee for the full purchase price of the airline.
The reserve bidder
Looking ahead to this latest update, there had been two worthy contenders for Mango Airlines. Under the amended plan, Sono noted that,
“In the event that the preferred bidder is unable to meet the terms of the transaction agreements, the reserve bidder will be approached to complete the transaction.”
If both bidders fail to meet the requirements, Sono will be forced to liquidate Mango Airlines.
A few commentators doubt the legitimacy and potential of this endeavor and are entirely justified in their pessimism. Furthermore, the recent suspension of the licenses of the airline Mango “for a period of two years, with immediate effect” will undoubtedly have a negative impact on the negotiations and will undermine the rescue plan.
However, it would be a shame to see this affordable, flamboyant and cheerful air carrier dissolve into the sky.