Flash Briefing: Jet Airways faces bankruptcy; Mzi owes millions; EOH heps plunge; Shoprite shines

By Alec Hogg

Here’s today global business news headlines:

  • Indian-owned Jet Airways, a discount airline which flies 600 domestic and 380 international routes, cancelled all flights over the weekend stranding thousands of passengers. The noose of a $1.2bn debt burden is progressively tightened on an airline once India’s market leader, but now facing bankruptcy unless it receives a hefty capital injection. Jet was forced to ground 10 aircraft on Thursday over unpaid fees to leasing firms. The suspension is for all flights between Saturday and tomorrow. Further pressure was applied on the airline yesterday when the chairman of an 1,100-member pilots trade union announced that Jet Airways pilots would go on strike after not receiving salaries for three and a half months. The company is apparently also down to 10 operational planes from a fleet of 123 aircraft. Jet Airways is 51% owned by banks who took over when founder and chairman Naresh Goyal stepped down last month. Abu Dhabi’s Etihad Airways owns 24% of its equity, after an investment in 2013.
  • Controversial South African entrepreneur Mzi Khumalo’s gold mining company Metallon has halted production at three of its four Zimbabwean mines because of debt that exceeds $200m. The company confirmed to Bloomberg over the weekend that it suspended operations after a group of workers, owed more than two years of wages, had applied for the mines to be put into business rescue. Citing unnamed sources, the Johannesburg Sunday Times reported yesterday that Khumalo is now considering selling the mines, with Canadian group B2Gold, which has operating gold mines in Namibia and Mali, tipped as the likely buyer.
  • South Africa’s one-time go-go stock EOH, whose share price has lost almost two thirds of its value this year, confirmed the shareholders’ worst fears when announcing a headline earnings per share reverse from positive 319c to a negative 993c for the six months to end January. Some good news in a trading statement issued on Friday is that revenues were stable at R8.4bn and the company has cash reserves of almost R1bn. EOH says good progress is being made on implementing a new strategy. A recently completed strategic review identified business lines and minority stakes in companies which are no longer core to the business.
  • South African stocks ended the day slightly firmer on Friday with the JSE all share index closing a third of a percent better. Once again it was a retail company that took the honours with a 3% gain for Shoprite taking its price gain for the week to a chunky 11%. Dischem was another feature, gaining 2.6% to a week’s improvement to 8.5%. Softer precious metals prices together with a currency firming to better that R14 against the US dollar, gave gold and platinum stocks another tough day where Northam, down 2.7% and AngloGold, off 1.5%, leading the pack lower. Sibanye was the shocker of the week with a share price drop of almost 20% after it announced plunging production and hefty sales of shares for cash.