Companies losing faith in SAA; Inflated Tongaat Hulett profits; Zuma’s date with justice; tweeting for Africa

By Linda van Tilburg

  • Companies are starting to lose faith that South African Airways can and will be saved. Sanlam Travel Insurance Consultants said it would exclude SAA from its insolvency cover. That message and the government’s mixed messages about bailing out the airline again prompted Flight Centre Travel Group, one of the country’s biggest travel companies to stop selling SAA tickets. Flight centre’s managing director for the Middle East and Africa, Andrew Stark said they had made an immediate move to mitigate the risk to themselves and their clients. Independent airline economist, Joachim Vermooten told Bloomberg that the biggest and most immediate impact of the loss of insurance cover and travel agency bookings would be on SAA’s domestic business-travel revenue. He said the effect on its international business would take longer to determine, because the bulk of passengers on those flights are tourists.
  • An investigation into alleged wrongdoing at Tongaat Hulett found that a group of at least 10 senior executives at the sugar maker used accounting methods that led to profits and certain assets being overstated. Former Chief Executive Officer Peter Staude, who headed the company for 16 years, was among those identified. The report by PwC also found the company recognised revenue too early from land sales between fiscal 2013 and 2019 and overstated the value of cane assets and of sugar sales in Zimbabwe. PwC also pointed to governance failures and a “culture of deference” that contributed to the financial misstatements. The board may start legal action against those involved, to recover bonuses and benefits paid. It’s also working with the police and National Prosecuting Authority, and the equivalent authorities would be engaged in Zimbabwe and Mozambique, where some of the wrongdoing was alleged to have occurred.
  • Mercedes Benz owner, Daimler is cutting 10,000 jobs around the world, citing the industry’s move towards electrical vehicles as the reasons. The German company said the automotive industry was in the middle of the biggest transformation in its history and that it needed to reduce staffing costs in order to develop clean vehicles. Management positions will also be trimmed by 10%. Daimler said the changes will safe €1.4bn by the end of 2022. Electric cars, which have fewer parts than those powered by internal combustion engines need fewer workers to assemble. Other automakers have also announced job cuts for the switch to electric vehicles. Audi will shed 9,500 jobs by 2025; Ford said it would slash thousands of office jobs worldwide and Nissan announced in July it would reduce its global workforce by 12,500.
  • Emerging markets may need more than a surprise recovery in Chinese manufacturing to exorcise the pain of November. Bloomberg reports that there are too many risks for Emerging markets to get a lift from data out of China. Chinese official manufacturing PMI surged past the 50 level for the first time since April, but the on-off state of trade talks, currency weakness in Latin America against a backdrop of popular unrest and a slump in India’s economic growth are likely to curb investor enthusiasm. China could retaliate after President Donald Trump signed a bill backing Hong Kong’s protestors. Investors are turning their attention to a slew of PMIs across Europe and the Middle East and Africa this week with manufacturing data for South Africa due today.
  • Former President Jacob Zuma’s long-awaited trial on corruption charges over a $2bn arms deal is set to go ahead in February next year after the Pietermaritzburg High Court dismissed an appeal by Zuma that sought to prevent his prosecution on corruption charges. The National Prosecuting Authority initially filed the charges against Zuma a decade ago but set them aside shortly before Zuma successfully ran for President in 2009. Following appeals and lobbying by opposition parties, the charges were reinstated in March 2018. Both Zuma has the option to approach the Supreme Court in his push to dodge trial, but legal experts say his prospects of success are slim. The former president has alleged that his case had been prejudiced by lengthy delays.
  • Twitter Boss Jack Dorsey has announced that he would be living in Africa for several months in 2020. In a message on the social media platform, Dorsey revealed that he would be spending three-to-six months next year on the continent but he said did not know where he would be living. “Africa will define the future (especially the bitcoin one) he tweeted last week after stopping off in South Africa, Ghana, Nigeria and Ethiopia.