Gordhan to SAA, Mango: Come to an agreement, or no sign-off on proposed sale

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  • Minister of Public Enterprises Pravin Gordhan wants SAA and the business rescue practitioner of its subsidiary Mango to resolve concerns regarding a proposed sale of the low-cost airline.
  • Gordhan wants written approval from SAA before he considers an application for approval of the proposed sale in terms of the Public Finance Management Act.
  • Mango's rescue practitioner has met with SAA's board and is hopeful that an updated PFMA application will be submitted to Gordhan before the end of November.
  • For more stories, go to the News24 Business front page.

Minister of Public Enterprises Pravin Gordhan has told South African Airways (SAA) and the rescue practitioner of its subsidiary Mango that he will not consider an application submitted to him to approve the proposed sale until they have resolved concerns previously raised about the matter.

This comes just weeks before the date Mango's rescue practitioner, Sipho Sono, had wanted the low-cost airline to resume operations. 

On 26 October, Gordhan addressed a letter to SAA, requiring its board to liaise with Sono, to resolve reservations the state-owned flag carrier had raised about the proposed sale, his latest report to creditors says.

The exact nature of these qualms was not revealed. However, in terms of the Public Finance Management Act (PFMA), SAA submitted an application directly to Gordhan in September - but it was submitted along with a list of concerns SAA had about the proposed sale of the low-cost airline, Sono's previous report said. 

In Sono's view, SAA's concerns are "of a mere housekeeping nature", and not material. 

In mid-September, the DPE told Parliament's Portfolio Committee on Public Enterprises that it wanted to do its own due diligence on the buyer before signing off on any deal proposed by Sono. SAA's acting chair John Lamola told the committee that SA's domestic airline market remains risky, a factor that any investor in Mango would have to consider. 

Sono, who was told at short notice not to attend the briefing, claims the committee was not given an accurate picture of Mango's situation. On 5 October, he provided Gordhan with responses to SAA's concerns.

Gordhan then resorted to writing to SAA and Sono, instructing them to engage with each other and then providing him with a written motivation on why the PFMA application should be approved. Sono says he has since held a meeting with the board of SAA and is engaging with SAA as directed by Gordhan. 

He is hopeful that SAA's concerns will be resolved and that an updated PFMA application, including SAA's approval, will be submitted to Gordhan before the end of November. 

Furthermore, Sono confirmed that all leases of aircraft used by Mango have now been cancelled, and the planes handed back to lessors. A buyer would have to make its own leasing arrangements.

Mango was placed in voluntary business rescue in July 2021 and has not flown since. Sono wanted Mango to restart operations on 2 December 2021. However, SAA's shareholder, the Department of Public Enterprises (DPE), made it clear this could only be done if an investor bought Mango.

After a due diligence process, a consortium, whose identity has not yet been revealed, was selected by Sono as the preferred bidder to buy Mango.

If the PFMA application is approved, Competition Commission and other regulatory approvals would then still be needed.

If the investor process fails, Sono will implement a wind-down process already incorporated in the adopted business rescue plan.

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