Business Maverick reports that the government and SAA have washed their hands of raising money for Mango Airlines to fund the implementation of its business rescue plan. This means that Mango airlines likely to fold.
Mango, which is owned by the government and is a subsidiary of SAA, stopped flying at the end of July 2021 when it was placed under business rescue. Like SAA, Mango is financially distressed as it is loss-making and faces a smothering debt load of R2.8-billion that it cannot pay back.
We have seen the painful process of bringing SAA back to life – finding a private sector investor for such a small airline will be impossible I think.
SAA Board
The SAA board wants Mango to be hived off from its operations, paving the way for private sector players to provide the airline with capital and buy it.
SAA interim board chair John Lamola said “finding a strategic equity partner (SEP) for the low-cost carrier would be a sustainable solution” to fund its restructuring and restart.
Net assets
But the rescue plan reveals that Mango doesn’t have many assets to sell. The airline’s assets include a spare aircraft engine, furniture and equipment that are collectively worth R101.8-million — substantially less than the R2.8-billion it owes creditors. Mango, like other airlines, doesn’t own aircraft, but leases its fleet of eight planes from Ireland-based Macquarie Aircraft Leasing Service.
In 2019, Mango’s operating profit was R977.5-million. But since the start of Covid-related lockdowns in 2020, which brought flight activity to a halt, Mango’s operating profit fell to R462.8-million – and the airline swung into a financial loss of R157.1-million in 2021.
Restarting operations
Sono’s plan to save Mango involves restarting flight operations in December for the airline to generate ticket-sale revenue; reducing the workforce from 708 to 412 and (voluntary severance packages would be offered to workers); resuming operations with three aircraft (five aircraft will be returned to lessors); and passengers who bought tickets before Mango went into business rescue would be offered travel vouchers as recompense.