Company news in brief
30 January 2020 | Business
Cash-strapped state carrier South African Airways (SAA) will receive R3.5 billion of emergency funding from the government-owned Development Bank of Southern Africa, the airline's business rescue practitioners said on Tuesday.
SAA is fighting for its survival after it entered a form of bankruptcy protection in December and cancelled some flights because of cash shortages.
“We can confirm that the Development Bank of Southern Africa has committed R3.5 billion in funding to the SAA practitioners, with an immediate draw-down of R2 billion,” the team overseeing SAA's bankruptcy-protected restructuring said.
“Funding for the restructuring phase after the business plan is adopted is being considered by potential funders,” the practitioners said.
SAA has not made a profit since 2011, surviving instead on more than R20 billion in bailouts over the last three years. That has put the country's credit rating and investor confidence under increasing pressure.
Starbucks sees hit from
Starbucks Corp on Tuesday became the first major US company to warn of a financial hit from the new coronavirus outbreak in China, as it closed thousands of restaurants and adjusted operating hours in its biggest growth market.
The world's largest coffee chain delayed a planned update - based on strong quarterly earnings results - to its 2020 financial forecast because of the outbreak, which has caused over 100 deaths and over 4 000 confirmed cases in China.
Shares of the company, which operates 4 292 stores in China, fell 1% in extended trading.
The company expects the financial impact to be material but temporary, and it will depend on the number of stores it has to close and for how long. Currently about half of its stores are shuttered in China, which makes up about 10% of global revenue.
It will not know until March at the earliest what the financial impact will be, but its long-term double-digit growth expectations are intact, executives said.
EU will not ban Huawei
The EU will not ban Chinese telecom giant Huawei or any other company in Europe, a top official said on Tuesday, despite intense pressure from Washington to shun the firm over spying fears.
“It is not a question of discrimination, it is a question of laying down rules. They will be strict, they will be demanding and of course we will welcome in Europe all operators who are willing to apply them,” commissioner Thierry Breton said.
The EU, while never explicitly naming the Chinese giant, is struggling to find a middle way to balance Huawei's huge dominance in the 5G sector with security concerns pressed by Washington.
The proposal is part of a so-called “toolbox” of recommendations that will guide the EU's 27 post-Brexit member states as they build crucial 5G networks.
A ban on Huawei would ultimately be up to an individual member state, but the commission's middle road recommendation gives cover to European capitals to resist pleas from Washington.
EBay forecast disappoints
EBay Inc forecast first-quarter revenue below analysts' estimates on Tuesday, as the e-commerce company faces fierce competition from Amazon.com Inc and Walmart Inc.
“The relative growth rates of eBay's business versus Walmart's e-commerce efforts suggests eBay is losing market share to Walmart in the category,” D.A. Davidson analyst Tom Forte said.
Facing stiff competition in its marketplace business, eBay has shifted focus to its advertising and payments businesses, as well as worked to make its platform simpler to use by adding features such as grouped listings and personal recommendations.
EBay slashed nearly US$116 million in marketing expense in the fourth quarter in line with its continued effort to cut costs.
The company is also reeling under pressure from activist investors to hive off some of its businesses to improve profitability.
Airbus faces record US$4bn fine
Airbus faces a record US$4 billion fine and lower 2019 profits after unveiling a preliminary deal with French, British and US authorities following a crippling three-year probe into allegations of bribery and corruption over jetliner sales.
The deal, believed by anti-corruption experts to be the largest ever in a bribery case, ends an almost four-year crisis that led to a sweeping management overhaul and delayed plans to redeploy the plane giant's cash surplus.
If approved by courts, the deal is expected to allow Airbus to avoid criminal charges that risked banning the company from public contracts in the United States and European Union – a massive setback for one of Europe's top defence and space firms.
The European planemaker has been investigated by French and British authorities for suspected corruption over jet sales dating back over a decade. It has also faced US investigations over suspected violations of export controls.
Announcing the tentative agreement, Airbus - which dominates the commercial jet market alongside US rival Boeing - said it would take a provision of 3.6 billion euro (US$3.96 billion) in its 2019 earnings if the deal won approval in court hearings in the United States, Britain and France on Jan 31.