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Friday, 14th August 2020
8:05:27am

Business

Articles related to business

South Africa’s struggling state defence firm Denel told trade unions on Friday that it cannot honour a court ruling that it should pay outstanding salaries by Friday, a letter from Denel’s lawyers to the unions’ lawyers seen by Reuters showed.

“Our client requests that your clients grant it an indulgence to enable it to work on measures to raise funds,” Denel’s lawyers wrote in the letter, adding that Denel would aim to give an update no later the end of next week. Denel said in a statement that it remained committed to meeting its obligations and paying outstanding salaries as soon as possible.

-Reuters

Angola has agreed with OPEC to comply fully with a global pact on supply curbs and will compensate for previous overproduction by cutting more from July to September, two OPEC sources said.

The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, agreed to cut oil output from May by a record 9.7 million barrels per day (bpd) after the coronavirus crisis destroyed a third of global demand.

The record cuts are now due to run to the end of July, before tapering to 7.7 million bpd until December.

But some OPEC members, including Angola, have not fully delivered on their agreed production cuts since May.

Two sources told Reuters that Angola had now committed to improve its compliance with its quota and to make up for its May and June overproduction by cutting more in July to September.

“Angola has agreed to comply as per (its agreement) with the JMMC,” one of the sources said, referring to the OPEC+ panel, the Joint Ministerial Monitoring Committee (JMMC), which advises OPEC+ and holds its next meeting on July 15.

The JMMC, which is chaired by Saudi Arabia and monitors adherence with the oil curbs, has been pressing Angola and other laggards in the pact, such as Iraq, Kazakhstan, Nigeria and Gabon, to commit to improved compliance. 

Angola’s Ministry of Mineral Resources and Petroleum and state oil company Sonangol did not immediately respond to Reuters requests for comment.

In May, Angola pumped 1.28 million bpd, according to OPEC data, or 100,000 bpd more than its target. It trimmed production to 1.24 million bpd in June, based on a Reuters survey, 60,000 bpd above its target.

-Reuters

The South African government would need to find at least 10 billion rand ($580 million) in new bailout funds if it wants to rescue South African Airways (SAA) with most of its routes intact, a long-delayed rescue plan showed. 

State-owned SAA’s longstanding frailties have been exacerbated by the COVID-19 pandemic, which has pushed even previously profitable airlines into financial distress. 

SAA suspended commercial passenger flights in March, when the government imposed one of Africa’s strictest coronavirus lockdowns.

Rescue efforts have been the subject of fierce wrangling between the government, which wants SAA retained as a national asset, and the administrators who took over the airline in December after almost a decade of financial losses.

The administrators’ restructuring plan on Tuesday proposed the government fund or raise funding for a working capital injection of around 2.8 billion rand, 2.2 billion rand for layoffs, 3 billion rand for unflown tickets, 600 million rand for general concurrent creditors and 1.7 billion rand for lessors. 

The Public Enterprises Ministry said in a statement that it would assess the plan and that it wanted to see “a competitive, viable and sustainable national airline”. The Finance Ministry, which has authority over funding, did not respond to a request for comment on a public holiday.

The funding envisioned under the restructuring plan is on top of the 16.4 billion rand the government already set aside to repay SAA’s guaranteed debt and debt-service costs, as well as the cost of supporting the restructured SAA until it becomes profitable.

A projected income statement showed SAA making losses of more than 6 billion rand over the next three years.

The plan was based on SAA keeping almost all its African destinations, three of four domestic routes and roughly half its intercontinental destinations.

It envisages drastically scaling back the airline’s staff and fleet. Until the end of August, while many travel restrictions are expected to remain in place, SAA would need only some 1,000 staff and six planes, compared with roughly 5,000 staff and 44 planes when it entered administration. 

It would ramp up operations slowly, with staff numbers rising to 2,900 and a fleet of 26 planes. Such a dramatic staff reduction could lead to a confrontation with trade unions.

The administrators said they need the government’s support and a commitment on funding by July 15.

-Reuters

Kenya Airways has lost an estimated $100 million in revenue as a result of the coronavirus pandemic and related lockdowns, CEO Allan Kilavuka told reporters on Friday.

“We don’t have the full picture of how much we have lost but our estimate is since January to date we have probably lost in terms of revenue around about $100 million,” Kilavuka said.

“When we estimate till the end of the year we think we will lose probably between $400 and $500 million,” he said.

The coronavirus crisis has hit the global aviation industry hard, but Kenya Airways was struggling long before the outbreak. 

The government has been working on a plan to renationalise the airline, which is one of the biggest on the continent, to save it from mounting debts that had been restructured in 2017 in an attempt to save the business.

The pandemic-led crisis has delayed that process but it is still ongoing, chairman Michael Joseph said on Friday.

“It has just delayed it by a few months. We wanted to be completed in August, we probably we will complete now a little bit later than that,” he told reporters.

-Reuters

Orange, France’s largest telecom operator, believes it would benefit from having a wider footprint in Africa and will give itself a few months to make a possible move, Chief Executive Stephane Richard told Les Echos business newspaper.

“It could make sense to be in economies such as Nigeria and South Africa,” Richard was quoted as saying. “If one considers there are things to do, the time frame I am considering is rather a few months than a few years.” 

Richard declined to comment on a possible interest in South Africa’s MTN Group Ltd.

The Middle East and Africa, where Orange has a presence in 18 countries, is the company’s fastest-growing market. 

The region makes a large chunk of its revenues from payment transfers - a key part of the group’s diversification into financial services.

Orange said earlier this year it was bringing its operations in the Middle East and Africa into a single entity, paving the way for a potential listing of the operations that could raise cash to invest in overseas expansion.

Richard said Orange would also be looking at bolstering partnerships with health companies or institutions.

-Reuters

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