By Alec Hogg
In today’s global business headlines:
- Aircraft maker Boeing’s troubles deepened yesterday as European regulators joined China, Ethiopia and Indonesia in grounding the company’s 737 MAX planes. The decision comes in the wake of Sunday’s crash of a new Ethiopian Airlines 737 MAX in similar circumstances to the crash in Indonesia five months ago. Two Turkish Airlines 737 MAX aircraft were turned around in mid-flight after the British authorities barred the planes from its airspace. France, Germany and Ireland have also grounded the aircraft following overnight moves by Australia, Malaysia, Singapore and regulators in South America. Boeing maintains the 737 Max aircraft are safe to fly and the US authorities have thus far agreed with this assessment. But yesterday a trade union representing flight attendants at American Airlines called on the US to also ground the 737 Maxes over safety concerns. Boeing’s shares dropped another 6% yesterday after a similar decline on Monday. More than $20bn has been wiped off the company’s market value in the last two trading sessions.
- Carmaker Volkswagen, which sold almost 11m vehicles worldwide last year, is doubling down on electric vehicles. The group’s financial results presentation yesterday was dominated by news that by 2028 it will roll out 70 new electric models, rather than the 50 previously announced across its VW, Porsche, Audi, Seat and other brands. CEO Herbert Diess said as a result of the refocus the company would be unable to avoid layoffs saying production of an electric vehicle required 30% less labour than an equivalent internal combustion engine. The company’s first electric vehicles will start rolling off the production line later this year, including its first all-electric sports car, the Porsche Taycan, which has already received 20,000 pre-orders.
- Henley Business School in the UK has cancelled this year’s full-time MBA after demand for the one-year course collapsed. Henley is the first big UK business school to drop the full-time course, following a trend now well advanced in the USA, where the MBA was created. The Financial Times of London reports that highly ranked schools in the US like Iowa’s Tippie College of Business have axed their MBA programmes to concentrate on specialist degrees and shorter executive education courses. The FT says applications to US business schools fell 6.6% last year, their fifth successive decline. A Henley spokesperson said the business school’s last full time MBA intake of 26 students was down from the previous 40. Enrolments for its part-time executive MBA, however, rose 37% this year to around 700 students.
- South African construction company Group Five was yesterday put into business rescue. In a statement on the stock exchange news service Group Five said it had been experiencing cash flow difficulties for some time due to significant operating losses. These problems were exacerbated when over $100m in guarantees relating to its Kpone gas and oil-fired power project were called in late last year. A year ago, a consortium of lenders gave Group Five a R650m lifeline, but when approached again in February, refused to throw good money after bad. The company says it is likely that the listed Group Five shares are now worthless. The shares, which were priced at R45 each five years ago, traded at 89c ahead of their trading being suspended yesterday.
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