By Lehlohonolo Lehana.
The Air Services Licensing Council has suspended two air services licences issued to low-cost airline Mango and licences of Comair.
In a letter dated August 3, the council suspended Mango’s licences “for a period of two years, effective immediately, as Mango has not operated the licensed air services for an uninterrupted period exceeding 12 months”.
This follows airline’s administrator Sipho Sono saying an unnamed consortium bidding to rescue Mango had presented “adequate and satisfactory proof of funding”.
Mango went into voluntary business rescue at the end of July last year and has not flown since. It owes R2.85 billion to creditors, and also has about R183 million of unflown ticket liabilities. The only asset of value Mango has is a spare engine, and offers to buy it have been received.
In a status report published on 1 June, Mango’s business rescue practitioner noted that Public Enterprises minister Pravin Gordhan released funding worth R225 million to the state airline for its continued survival.
Sono, had previously taken the government to court over the release of state funds. Following Gordhan’s action, Sono withdrew his court application.
Sono said that the investor process is progressing according to the time frame agreed with the preferred bidder “and, accordingly, the BRP anticipates the purchase consideration will be deposited into the escrow account before the end of June 2022”.
“The BRP remains of the opinion that there is a reasonable prospect of rescuing the company, or that the BR proceedings would result in a better outcome for creditors and the shareholder of the company than would otherwise be achieved should the company be placed in liquidation,” said Sono.
Mango does not form part of the deal that will see the Takatso Consortium will obtain a 51% stake in SAA. Global Aviation, a minority shareholder of Takatso, operates its own airline, LIFT.
Mango can, therefore, not resume operations unless it secures an investor to buy and relaunch the airline. If such a sale fails and the rescue practitioner is not able to conclude a deal with a reserve bidder, the airline will be wound down. Then creditors will likely receive only 10c in the rand, Sono estimates.
All Mango’s employees have been retrenched apart from a few retained on short-term contracts for critical care and maintenance activities required while the process to secure an investor continues.
The council has also suspended two air service licences of Comair immediately and for a period of two years. Comair operated its own low-cost airline kulula.com as well as domestic and regional British Airways flights under a licence agreement. Comair was placed in provisional liquidation in June.