By Jackie Cameron
- SA taxpayers are to stump up billions of rands to fuel the draft rescue plan for South African Airways. The plan contains about R4.6bn of new bailouts as part of a restructuring aimed at saving the airline from collapse, reports Reuters. Bloomberg reports that South Africa’s government provisionally agreed to allocate at least R21bn to the country’s embattled national airline to help repay debt and resume operations after the lifting of Covid-19 travel bans. The proposed package includes about R17bn that will go toward repaying SAA creditors, according to a draft copy of a rescue plan prepared by administrators and seen by Bloomberg. As much as R2bn will go toward retrenchments and a further R2bn will be provided for working capital. “It would be irresponsible to comment on the draft plan which was leaked to the media,” a spokeswoman for the administrators said. “It is for discussions purposes only and we await comment from the affected persons.” South Africa’s Public Enterprises Ministry, which is responsible for SAA, has not yet discussed the draft plan, spokesman Sam Mkokeli told Bloomberg by phone. State-owned SAA entered business rescue – a local form of bankruptcy protection – in December and the government said in April that it would not provide further funding. The draft rescue plan, drawn up by the administrators and made public by the Democratic Alliance opposition party on Monday, said the government had agreed to fund the restructuring.
- Department of Basic Education Minister Angie Motshekga has apologised for delaying her address to the public, as well as her late postponement of the return to schools of students from 1 June until 8 June, reports MyBroadband.co.za. Motshekga said that following the presentation of three reports which showed that schools were not ready to reopen, she spent Sunday consulting with key stakeholders, says the website. “All three reports received converged on the fact that a substantial number of schools would not be ready for the reopening today,” Motshekga is quoted as saying. “It was for this reason that the sector requires more time to up its state of readiness.” Motshekga said she has visited several schools today, who said that while some schools were ready, others clearly were not. “We were not all at the same level,” Motshekga said. A meeting will be held on Thursday to assess the state of readiness, adds MyBroadband.co.za.
- Gains in South African stocks based on easing lockdown rules may not last as the country grapples with the damage wrought by the coronavirus pandemic, as well as structural challenges that saw the economy slip into a technical recession in 2019, according to analysts interviewed by Bloomberg. The FTSE/JSE Africa All Share Index rose as much as 2.5% on Monday after a change in the national disease-alert level allowed most people to return to work for the first time since the lockdown was instituted on March 27, says the news service, noting that the gauge has rallied 35% since hitting a seven-year low on March 19. Yet, according to Michele Santangelo, a money manager at Independent Securities in Johannesburg, the domestic economy “is in deep trouble” and the government has limited ability to assist. “It will likely take a few years before SA Inc. companies see a normalisation of their businesses,” Santangelo told Bloomberg by email. “I am not optimistic for SA Inc. stocks for the remainder of 2020.”
- President Cyril Ramaphosa has congratulated global tech entrepreneur Elon Musk – born in South Africa and who still holds South African citizenship along with passports for the US and Canada – for his company’s historic commercial flight to the international space station, reports the government’s news service. Powered by SpaceX’s Falcon 9 rocket, the company’s Crew Dragon spacecraft carried NASA astronauts Bob Behnken and Doug Hurley into space on Saturday, 30 May 2020, en route to docking with the International Space Station 19 hours later, it reports. “In the midst of our struggle against Covid-19, Elon Musk has made us proud as a country and continent,” said the president. “The Dragon’s successful flight to the International Space Station speaks of the ability of a resilient, industrious, fearless and visionary individual to harness talent and material resources to open new frontiers of hope, adventure and opportunity for generations into the future,” he is quoted as saying. “It is most appropriate that we have been given this hope and excitement at a time when insecurity and uncertainty defines the human condition in many parts of the world,” said President Ramaphosa. This was the first time in history that a private-sector entity launched astronauts for NASA, which is an entity of the United States government. Elon Musk holds South African, Canadian and United States citizenship, it said.
- Sasol was among the best performers on the Johannesburg Stock Exchange on Monday, gaining about 12%. Meanwhile, Bloomberg reports that a shortage of diesel fuel in South Africa will ease up in a few weeks when about 30% of its refining capacity, idled because of a drop in demand spurred by the Covid-19 lockdown, will return to service. Sasol and Total SA shut the Natref refinery in April after the government restricted economic activity to curb the spread of coronavirus, says the news service. The measures also extended a planned shutdown by the Glencore-owned Astron Energy Cape Town refinery. The plants comprise almost a third of the nation’s nameplate fuel-making capacity of over 700,000 barrels a day. Natref will reopen in mid-June and the Cape Town refinery in July, according to the South African Petroleum Industry Association. It said in an earlier statement that some of the lockdown measures being eased created a “dramatic increase” in demand for diesel, resulting in rationing of the fuel. More than half of the country’s capacity had been shut due to the lockdown as well as unplanned outages, says Bloomberg.
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