A wrap of this week’s major business stories

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Some of this week’s business headlines include the state of the aviation industry, Dudu Myeni’s delinquency case and the inflation outlook.

State of the Aviation Industry

Transport Minister Fikile Mbalula says this week’s grounding of flights does not signal a crisis, but was part of a routine safety check.

The South Africa Civil Aviation Authority (SACAA) says it has released back to service 40 of the 46 planes grounded this week.

On Tuesday, South African Airways, Comair – which operates British Airways, Kulula, and Mango airlines, had to recall some of their aircrafts.

An oversight inspection by SACAA discovered some irregularities at SAA Technical which provides maintenance and technical services for these airlines.

Twenty five SAA, 12 Comair and seven Mango planes were affected.  Mbalula says his department is tasked with ensuring that planes are safe at all times.

“This work is routine and normal of SACAA to ground aircrafts and issue prohibit orders. We should never be overly concerned when this happens; however if such has to happen in large scale it has to be communicated so that those who are using means such as air should not be inconvenienced.”

Meanwhile, Head of SACAA Poppy Khoza says a total of 46 aircrafts grounded from Mango, SAA and Comair have been released back to service after corrective measures were submitted to them.

She says out of the five findings three of the aircrafts were grounded as a result of administrative challenges such as lax in management systems but two findings were deemed serious in nature.

“But the two which the minister did touch on which we deemed critical and serious related to the issue of releasing aircraft to service by inadequate personnel and the second one related to the issue of maintenance of flight data recorders as well as the cockpit voice recorders which were not done in line with the applicable regulations.”

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Dudu Myeni delinquency case

The Organisation Undoing Tax Abuse (OUTA) says it is disappointed by the court’s decision to – yet again – postpone proceedings in the delinquency case against former SAA board chairperson Dudu Myeni.

The high court in Pretoria has ruled that arguments in the delinquency case against former SAA board chairperson, Dudu Myeni will be heard on the 25th of November, while the trial itself has been postponed to the 27th of January 2020.

Myeni’s new defence team asked for more time to make amendments to her plea – arguing that her denials did not sufficiently deal with some of the allegations against her.

In 2017, the Organisation Undoing Tax Abuse and the SAA Pilots Association brought a case against Myeni to have her declared as a delinquent director.

Inflation outlook

Analysts say the fiscal challenges facing the country make it unlikely for the Reserve Bank to reduce interest rates, despite a slowdown in inflation.

Figures released by Statistics South Africa earlier, showed that the inflation rate decreased to 4.1% in September, from 4.3% in August 2019. The main contributors to the slowdown in the inflation rate came from food, housing and utilities, as well as miscellaneous goods and services.

An Economist at NKC African Economists, Elize Kruger says the Reserve bank will be keeping a close eye on the upcoming Midterm Budget Policy Statement and rating agency decisions before making any changes to interest rates.

“The looming risks that we might see from negative credit rating, perhaps a further possible downgrade from Fitch rating agency, or a change in the outlook from Moody’s on the first of November. We expect that interest rates will remain unchanged for the foreseeable future.”