Gordhan’s appeal bid struck down on ruling over Mango sale decision

The high court in Pretoria on Wednesday dismissed an application by public enterprises minister Pravin Gordhan for leave to appeal against a judgment forcing him to make a decision about the sale of low-cost airline Mango, according to a judgment seen by Business Day.

Mango, a subsidiary of state-owned SA Airlines (SAA) is in business rescue.

The high court had issued an order declaring the minister’s failure to make a decision regarding an application in terms of the Public Finance Management Act for the proposed sale submitted to him in November last year is unlawful and constitutionally invalid. Gordhan had 30 days to make a decision and provide reasons for it, failing which it could be presumed the application was approved.

The minister instead applied for leave to appeal against the judgment, effectively putting implementation of the court order on hold.

Gordhan and his department’s application for leave to appeal was opposed by Mango, its business rescue practitioner Sipho Sono and the trade union Numsa. The application for leave to appeal was dismissed with costs.

A decision by Gordhan is needed to determine whether the sale of Mango to a preferred bidder selected by the business rescue practitioner in terms of the accepted rescue plan can go ahead.

If the attempt to sell Mango fails, Sono is likely to have to wind down the airline. In that case, employees and post-commencement creditors will get 100c in the rand and pre-commencement concurrent creditors only 4.43c in the rand.

Stalling tactic

Sono has claimed in the past that Gordhan wanted to see the business case of the selected investor before making a decision. Sono is therefore concerned about sharing such information as Mango is likely to compete with its parent company, SAA.

Gordhan and the department said in their application for leave to appeal against the high court ruling that he wants to ensure that all aspects of Mango’s business rescue process “are transparent, legally sound and in the best interest of the SA public”. He denied that it is a stalling tactic or an attempt to undermine the need to complete Mango’s business rescue process.

The department said Gordhan is still awaiting information from Sono to enable him to make the decision on the Public Finance Management Act application. It includes a detailed business plan to assess the viability of the consortium selected by the business rescue practitioner to buy Mango, comprehensive due diligence, and foreign ownership details to comply with laws.

Sono contends in past court documents he has already made it clear that no further information will be forthcoming from him apart from what has already been provided to the department and the minister.

Sono was hoping that Mango could restart operations in December 2021 — to benefit from the peak summer holiday season at the time. However, Gordhan stipulated an investor had to be found to get Mango off the ground again. He would not allow the R819m allocated to Mango from government funding for SAA’s own business rescue to be used to get the airline to fly again.

In the case of SAA’s own strategic equity partnership with the Takatso Consortium that is still in the process of being finalised, Gordhan told parliament that it fell outside the scope of the act. Takatso will obtain a 51% stake in SAA.