Stricken South African low-cost airline Mango Airlines (MNO, Johannesburg O.R. Tambo) is finally heading for liquidation after a potential investor withdrew from a proposed rescue plan, citing unrealistic timelines and loss of funding support.

In a notice dated July 31, the investor, Ubuntu Air Services Proprietary Limited (Ubuntu Air), told the airline’s business rescue practitioner, Sipho Sono, that it had "second thoughts about the transaction" and would not proceed. "Part of the reason was that the delays have made scheduling a resumption of operations unrealistic, and the commitment of the other funding partner could not be secured," Sono said in his latest update to creditors.

In June, the South African High Court stopped the rescue bid on the behest of one of the creditors, Aviation Co-ordination Services Proprietary Limited (ACS), ruling that the plan to compel creditors to cede their claims to a new investor without any prospect of being repaid was "invalid and of no force and effect".

Sono filed an appeal, but rather than persisting with lengthy and costly legal proceedings, now proposes an amended plan be put to creditors that will see a structured wind-down of the company. According to Sono, this will result in a better return for creditors than would result from an immediate liquidation.

He plans to publish an amended rescue plan within 15 business days, after which creditors will vote on it. If adopted, creditors would receive an initial dividend equal to 70% of the projected payout within 30 days, with the balance distributed three to five months later, once a process to verify any unflown ticket liability – expected to conclude by the end of September 2025 – is finalised. According to Sono, the expected recovery in a structured wind-down could reach 12.18 cents in the South African rand (USD0.0068 in the USD).

Mango, a 100% owned subsidiary of South African Airways, has been in business rescue since July 2021. According to Sono, the company no longer has any assets beyond about ZAR382.5 million rands (USD21.7 million) in cash reserves. However, it faces outstanding tax liabilities to the South African Revenue Service (SARS) of ZAR207.1 million (USD11.7 million), including penalties of about ZAR110 million (USD6.2 million) for the 2019 to 2021 tax years. Those assessments are currently being disputed.

Sono said Mango had received ZAR734 million (USD 41.7 million) from SAA. This falls below the ZAR819 million (USD57.3 million) in state aid that was allocated to Mango under SAA's own business rescue plan in June 2021. The funds were diverted from ZAR10.5 billion (USD596.5 million) originally allocated for SAA's rescue.

In addition, an aircraft engine was sold in May 2023 for ZAR96 million (USD5.4 million), bringing Mango's total cash to ZAR830 million (USD47 million). Of this, the lion's share of ZAR442.2 million (USD25.1 million) was spent on salaries and severance packages. The business rescue process cost ZAR11.4 million (USD647,619). Some ZAR24.2 million (USD1.3 million) was paid to unnamed consultants, and ZAR26.8 million (USD1.5 million) was spent on legal fees.

Distribution to creditors

According to the first and final liquidation distribution account, the total claims against Mango amount to ZAR6.4 billion (USD362.8 million), of which ZAR207.1 million is due to SARS (a preferred creditor), with only ZAR166.2 million (USD9.4 million) available for concurrent creditors.

The unsecured claims include ZAR4.5 billion (USD255 million) from foreign concurrent creditors, who are due to receive only ZAR123.1 million (USD6.9 million). Local concurrent creditors have claimed ZAR1.4 billion (USD79.3 million) but will likely receive only ZAR38.6 million (USD2.1 million). The total recorded unflown ticket liability stands at ZAR169.2 million (USD9.5 million), with an approximate dividend payable of ZAR20.6 million (USD1.1 million).

Amongst Mango's biggest creditors are maintenance provider SAA Technical, with a claim of ZAR805.8 million (USD45.7 million), Macquarie Aircraft Leasing Services with ZAR481.9 million (USD27.3 million), SAA with ZAR314.3 million (USD17.8 million), Lufthansa Technik with ZAR292.9 million (USD16.6 million), Airports Company South Africa (ACSA) with ZAR170.3 million (USD9.6 million), and Start Ireland Leasing with a claim of ZAR 141.9 million (USD8 million). ACS, the litigating creditor, is owed ZAR23.7 million (USD1.3 million), of which ZAR2.8 million (USD158,699) will likely be paid out.

The road to liquidation

The latest development concludes a three-year struggle by Sono to get approval for the rescue plan proposed by Ubuntu Air, which made a binding offer for Mango on August 26, 2022. Ubuntu Air is a consortium led by AfricaStay, the wholesale tour operating division of family-owned Johannesburg-based Silver Peach Marketing, unnamed former Mango executives, and financial service provider DG Capital.

Ubuntu Air offered to buy all of SAA's shares in Mango for ZAR1,000 (USD56.80), subscribe to new shares worth ZAR1 million (USD56,791), which would be used to pay an additional "top-up" payment to creditors. Proceeds from the engine sale would also fund creditor payments, and Ubuntu Air would assume all unflown ticket liabilities. The investor provided proof of ZAR120 million (USD6.8 million) in liquidity.

The offer was subject to ministerial and regulatory approvals, limited due diligence, and the redeployment of 150 Mango staff. The expected implementation timeline was three to six months.

However, the rescue process was delayed by the refusal of the late Public Enterprises Minister Pravin Gordhan to approve the deal, citing concerns over the bidder’s structure, due diligence, and timing. Sono sued in February 2023 to force a decision. He said the litigation caused major delays in implementing the plan. The case eventually concluded in March 2024 when the Supreme Court of Appeal rejected the government’s final objection.

In the meantime, Mango’s international licences had been cancelled in February 2023, followed by its domestic licences in November 2024.

Revised last-minute plan

Since the investor's plan relied on valid licences and an air operator's certificate (AOC), the cancellations resulted in a revised business rescue plan and term sheet, which focused on preserving the Mango brand through a new joint venture with an existing AOC-holder.

Key features of the revised plan submitted in March 2025 would have seen Ubuntu Air acquire Mango's shares from SAA for ZAR1,000 by May 2025. Mango would have remained in business rescue but become privately owned. An investor partner with an existing AOC would have operated flights under the Mango brand. Holders of unflown tickets could have redeemed vouchers for flights or accommodation at AfricaStay properties.

Under the revised - but now abandoned plan - the re-capitalisation and restart were scheduled for Oct 31, 2025, with the full completion of the business rescue process by end-November 2025. Ubuntu Air would have subscribed for new shares worth ZAR100,000 (USD5,678) as a top-up for creditors, injected adequate working capital to fund operations, while Sono would have released ZAR20 million (USD1.1 million) from the engine sale proceeds after three months of the first flight to subsidise unflown ticket obligations.