Financial News in South Africa 29th November:
1. Flight Centre stops selling SAA tickets:
Travel group Flight Centre has stopped selling South African Airways tickets, citing “ongoing concerns” about the airline’s financial stability.
According to its website, Flight Centre South Africa, a subsidiary of the Flight Centre Travel Group, is the country’s largest travel specialist with 170 businesses across leisure, wholesale and corporate brands.
The decision is included in a letter, signed by Andrew Stark, managing director for the Flight Centre Travel Group in the Middle East and Africa, and dated November 28, 2019.
2. Eskom reports loss:
Eskom reported a net loss after tax of R20.7bn for the 2019 financial year, and expects a similar-sized loss for next year.
The utility made a profit of R1.3bn in the first six months of the year. But Mabuza said this would change to a multi billion-rand loss in the second half of the financial year for a number of reasons.
There include the following:
- lower sales at lower prices during the summer months;
- the effects of unplanned breakdowns – which include the use of expensive diesel to fuel open cycle gas turbines;
- the fact that increased employee benefits are set to kick in during the second half of the year;
- higher costs of maintenance during the summer; and
- higher debt servicing costs due in the next six month
3. No loadshedding until next year:
Meanwhile, Eskom says its system will remain constrained, but there are no plans to load shed until the end of March.
Speaking at Eskom’s interim results announcement at Megawatt Park on Thursday, chairperson and acting CEO Jabu Mabuza said the system remains vulnerable.
“We are not planning to load shed. We continue to be tight,” Mabuza said.
General manager of system operator, Bernard Magoro said that the system is expected to do better from March.
“From March onwards we should be okay. Again, it depends on the level of maintenance that we will be able to execute in this time. We are not planning any load shedding until the end of March,” Magoro said.
4. Producer price inflation falls:
Annual producer price inflation fell to 3% in October from 4.1% in September, the sixth consecutive month of declines.
The index, released by Statistic South Africa on Thursday, is a weighted index of prices that businesses charge at the wholesale or producer level for final manufactured goods.
The decline was in line with market expectations, according to Investec economist Lara Hodes.
“This is markedly below its recent peak of 6.5% y/y recorded in April 2019,” she said. “The notable moderation in the headline result was chiefly supported by further pricing relief from the coke, petroleum, chemical, rubber and plastic products category. They make up a sizeable 20.23% of the PPI basket”, she explained.
5. FirstRand fossil fuel plans:
FirstRand has committed to disclosing its fossil fuel-related assets and lending but said it can’t meet a deadline requested by some investors.
A resolution to produce that information by October next year wasn’t passed at the Johannesburg-based company’s annual general meeting on Thursday. However, shareholders backed FirstRand’s decision to publish its policy for lending to fossil-fuel projects.