|

In April, prices fell to R158 a bag after the macro-economic reform programme sorted out the foreign exchange difficulties and the rupee continued to appreciate.

With the abundance of foreign exchange in the banks, competition and a stronger rupee, it is expected that the next consignments of cement will be even cheaper.

HM and world airline industry during recession

Air Seychelles (HM) was turned into a political football recently and kicked around after it applied for a loan from the government at a time when the world is in deep economic recession.

Because international operations generate most of Air Seychelles’ revenue, the recession in the main tourism markets naturally contributes to losses.

Airlines like British Airways would have announced redundancies and other cost-cutting measures. In Seychelles we are waiting for the International Monetary Fund to advise us not to increase costs when a recession is affecting business, unless the added expenditure has the potential to generate higher returns.

We have been warned that business and politics do not mix. 
Meanwhile, the International Air Transport Association (IATA) has reported from Geneva, Switzerland, that airline industry revenues are expected to lose almost five billion dollars because of the difficult economic climate.

Giovanni Bisignani, the IATA’s director general and chief executive, said: “The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago.
 
“Our loss forecast for 2009 is now US $4.7 billion. Combined with an industry debt of US $170 billion, the pressure on the industry balance sheet is extreme.”

Demand is projected to fall sharply with passenger traffic expected to contract by 5.7% over the year. Revenue implications of this fall will be exaggerated by an even sharper fall in premium traffic.

Cargo demand is expected to decline by 13%. Both are significantly worse than the December forecast of a 3% drop in passenger demand and a 5% fall in cargo demand. Yields are expected to drop by 4.3%.
Falling fuel prices are helping to curb even larger losses.

“Fuel is the only good news. But the relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care. Airlines face two immediate fundamental challenges – conserving cash and carefully matching capacity to demand,” said Mr Bisignani.

African carriers are expected to produce 2009 losses of US $600 million, six times the US $100 million lost in 2008. The continent’s carriers are losing market share on long-haul routes, and Ethiopian Airlines is the only carrier in Africa reported to have made a profit last year. 

Air Seychelles lost money during the last two financial years because of damage to one of its aircraft in Paris and record fuel prices.

For the past 12 years the airline has had to stand on its own two feet and fully fund some past debts and its expansion, it said in a statement. After 1998, Air Seychelles made profits amounting to €15.8 million.

In spite of the global economic difficulties, HM is aiming for a small profit or to break even during the financial year 20009-10.

“HM is simply asking for a loan of €3 million because of heavy investments it is making to improve its product and to face competition,” said the airline’s statement.

Only the ruling Parti Lepep MNAs voted in favour of the supplementary budget that contained the R30 million for Air Seychelles. 

Commodity briefs from around the world
• Global Grain speaker tips maize to be next year’s winner
• CPO futures edge higher on rising oil prices and rain
• Japan to fulfil trade agreements with rice tender
• South Korean maize imports slump, rice tender issued
• Vietnam rice prices touch year-highs on more demand
• Russian grain exports pegged to stabilise next month
• Bangladesh issues new international wheat tender
• South African maize deliveries rise week-on-week

Crude oil prices
As at 19/11/09
Nymex Crude Future    79.92 dollars per barrel
Dated Brent Spot          78.78 dollars per barrel