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Air Botswana to capitalise on Cape monopoly

  • New Cape Town office opened
  • Travel route hinges on tourism, business
  • Total re-fleeting in 5 year strategy


CAPE TOWN: The national flag carrier, Air Botswana, has formalised its operations in Cape Town, South Africa by opening an office to better market the airlines route and supervise operations.


The airline is also looking to capitalise on the Cape Town-Gaborone route Air Botswana started flying to Cape Town in June 2012 first with the operation of the Maun-Cape Town route. In October of the same year, we began the Gaborone-Cape Town operation.


Cape Town, which is rated among the top places in the world to visit, carries great potential for tourism and business opportunities with its routes from the city into Gaborone and Maun.


Last week on Friday, the new general manager of Air Botswana, Tozivazvipi Ben Dahwa, travelled with senior members of management to officially open the Air Botswana office at the Cape Town International Airport in Western Cape province of South Africa.

The management team which included, Joe Motse, also lobbied stakeholders in the travel and tourism sector in the province to utilise the airliner for business and leisure travel to Gaborone and Maun to Cape Town.


South Africa Country Manager Isaac Mabote, told BusinessPost that though only Air Botswana and South African Airlink travel to Cape Town from Botswana, Air Botswana has an upper hand as it the monopoly of direct flights from Cape Town.


South African national, Ezra du Plessis, will be running the office and marketing the airline in Cape Town and the Western Cape province as a whole.


Du Plessis told this publication that, the airline has a database of clients that use Air Botswana when travelling into Botswana from the tourism hub that is Cape Town.


“I will be supervising Air Botswana operations as well as marketing the route in the whole of the Western Cape,” said Du Plessis. Air Botswana is the only airline that flies direct from Cape Town into Botswana.


It is for these challenges that the airline realized the need to have a permanent presence in this very important destination and market. The presence of dedicated personnel based in Cape Town
Global aviation company, Menzies Aviation services ticketing and ground operations for Air Botswana and Mabote says the firm will remain as the service provider due to their experience and expertise.
Menzies Aviation, a global firm operating 149 stations in 31 countries serves over 500 airline customers handling over 1 million flights and 1.5 million tonnes of cargo per annum.


The GM revealed that under his watch, the airline has improved its efficiencies and reliability. “Over the past few months, our performance record has consistently been above 85 percent OTP, with most delays contained within 60 minutes,” adding that “at a time when one or two of our aircraft are away in heavy maintenance shop visits, we have set ourselves a target of 90 percent in the short term ahead of our re-fleeting and upgrade strategy implementation.”


“The story to tell really is that we now know exactly where the pain is coming from and we have started with treatment,” said Dawha.


The new GM revealed that at some point the on time performance was 65 percent and in aviation terms this means a customer has a 50/50 probability they can fly.


“When an airline reaches this point in simple terms it means there is no business to talk about. Operating below 70 percent on time record is indicative of an airline business under distress,” said Dahwa, putting the efficiency issue into context.


Ben Dahwa, when first engaging with media after his appointment, noted that: “The airline is in need of serious assistance in the areas of technology solutions to leverage world class available solutions for enhanced efficiency in addition to revenue management to respond to rapidly changing industry challenges among other key issues.’


Staff morale was also said to be low, with turnover of general managers at the airline going unprecedented, painting a picture of a corporation in distress.


The loss making airline has been plagued by inefficiencies in operations that have further taken away some confidence from the customers.


 The airliner has completed a five year strategy that will most likely involve replacement of the six fleet of aircraft.


“Finally, work has been completed with the assistance of renowned Consultants to finalise a five year strategy plan which will inform a whole range of initiatives to drive revenues, manage and contain costs, increases efficiencies and productivity as well as appropriate resources in all business areas to optimise our business revenues.”  


The key strategic areas which have been considered, are; Route network and schedule; Re-fleeting/Fleet upgrade; Review of internal processes and procedures/process re-engineering to gain improvement in how we do things; Use of Technology to enhance delivery and simplicity and improving our people resource and processes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Joe Motse, Commercial Director at Air Botswana told BusinessPost in a short interview, that the re-fleeting, which awaits approval by Cabinet, will involve aircraft that is suitable for regional operations; these include the business routes of Gaborone-Johannesburg as well as leisure routes for tourism between Cape Town and Maun, and the mixed routes being Gaborone-Harare and Gaborone-Lusaka.


“The new will fleet will be a mix of jet and turbo prop aircraft that have however been modernised for faster flying times,” said Motse.


The airline is confident of having optimised its operations and have also recently expanded our cargo facilities and handling space, positioning ourselves well, in anticipation of increased cargo business through Sir Seretse Khama International Airport, which is said to be adept to handle all types of cargo such as perishables and valuables.

The airliner currently operates a dedicated cargo freighter on the Johannesburg- Gaborone route twice a week enabling customers to now send more volumes that were not possible with commercial aircraft.


The airliner is also in the process of acquiring new ground handling equipment to the tune of P43 million.  
                                                                                                                                                                                    
 

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Business

Botswana records first trade surplus since January

7th October 2021
Botswana-records-first-trade-surplus-

Botswana has recorded its first trade surplus for 2021 since the only one for the year in January.

The country’s exports for the month of July surpassed the value of imports, Statistics Botswana’s July International Merchandise Trade data reveals.

Released last Friday, the monthly trade digest reports a positive jump in the trade balance graph against the backdrop of a series of trade deficits in the preceding months since January this year.

According to the country’s significant data body, imports for the month were valued at P7.232 billion, reflecting a decline of 6.6 percent from the revised June 2021 value of P7.739 billion.

Total exports during the same month amounted to P7.605 billion, showing an increase of 6.1 percent over the revised June 2021 value of P7.170 billion.

A trade surplus of P373.2 million was recorded in July 2021. This follows a revised trade deficit of P568.7 million for June 2021.

For the total exports value of P7.605 billion, the Diamonds group accounted for 91.2 percent (P6.936 billion), followed by Machinery & Electrical Equipment and Salt & Soda Ash with 2.2 percent (P169.7 million) and 1.3 percent (P100.9 million) respectively.

Asia was the leading destination for Botswana exports, receiving 65.2 percent (P4.96 billion) of total exports during July 2021.

These exports mostly went to the UAE and India, having received 26.3 percent (P1. 99 billion) and 18.7 percent (P1.422 billion) of total exports, respectively. The top most exported commodity to the regional block was Diamonds.

Exports destined to the European Union amounted to P1.64 billion, accounting for 21.6 percent of total exports.

Belgium received almost all exports destined to the regional union, acquiring 21.5 percent (P1.6337 billion) of total exports during the reporting period.

The Diamonds group was the leading commodity group exported to the EU. The SACU region received exports valued at P790.7 million, representing 10.4 percent of total exports.

Diamonds and Salt & Soda Ash commodity groups accounted for 37.8 percent (P298.6 million) and 6.2 percent (P48.7 million) of total exports to the customs union.

South Africa received 9.8 percent (P745.0 million) of total exports during the month under review. The Diamonds group contributed 39.9 percent (P297.4 million) to all goods destined for the country.

 

In terms of imports, the SACU region contributed 62.7 percent (P4.534 billion) to total imports during July.

The topmost imported commodity groups from the SACU region were Fuel; Food, Beverages & Tobacco, and Machinery & Electrical Equipment with contributions of 33.3 percent (P1.510 billion), 17.4 percent (P789.4 million) and 12.7 percent (P576.7 million) to total imports from the region, respectively.

South Africa contributed 60.1 percent (P4.3497 billion) to total imports during July 2021.

Fuel accounted for 32.1 percent (P1.394 billion) of imports from that country. Food, Beverages & Tobacco contributed 17.7 percent (P772.0 million) to imports from South Africa.

Namibia contributed 2.0 percent (P141.1 million) to the overall imports during the period under review. Fuel was the main commodity imported from that country at 82.1 percent (P115.8 million).

During the months, imports representing 63.5 percent (P4.5904 billion) were transported into the country by Road.

Transportation of imports by Rail and Air accounted for 22.7 percent (P1.645 billion) and 13.8 percent (P996.2 million), respectively.

During the month, goods exported by Air amounted to P6, 999.2 million, accounting for 92.0 percent of total exports, while those leaving the country by Road were valued at P594.2 million (7.8 percent).

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Business

The 2021/2022 Stanford Seed Transformation Program Begins

7th October 2021

Founders from twenty companies have been accepted into the program from Botswana, Namibia, and South Africa

The 4th Cohort of the Stanford Seed Transformation Program – Southern Africa (STP), a collaboration between Stanford Graduate School of Business and De Beers Group commenced classes on 20 September 2021. According to Otsile Mabeo, Vice President Corporate Affairs, De Beers Global Sightholder Sales: “We are excited to confirm that 20 companies have been accepted into the 4th Seed Transformation Programme from Botswana, Namibia, and South Africa. The STP is an important part of the De Beers Group Building Forever sustainability strategy and demonstrates our commitment to the ‘Partnering for Thriving Communities’ pillar that aims at enhancing enterprise development in countries where we operate in the Southern African region”. Jeffrey Prickett, Global Director of Stanford Seed: “Business owners and their key management team members undertake a 12-month intensive leadership program that includes sessions on strategy and finance, business ethics, and design thinking, all taught by world-renowned Stanford faculty and local business practitioners. The program is exclusively for business owners and teams of for-profit companies or for-profit social enterprises with annual company revenues of US$300,000 – US$15million.” The programme will be delivered fully virtually to comply with COVID 19 protocols. Out of the 20 companies, 6 are from Botswana, 1 Namibia, and 13 South Africa. Since the partnership’s inception, De Beers Group and Stanford Seed have supported 74 companies, 89 founders/CEOs, and approximately 750 senior-level managers to undertake the program in Southern Africa.

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Business

Minergy overcomes challenges – improves revenue and produces record breaking coal sales to date

7th October 2021
Minergy

Minergy, the coal mining and trading company with the Masama coal mine, this week released results for the year ended 30 June 2021. The company achieved revenue of P193 million (2020: P81 million) with significant improvement in sales volumes surpassing 415 000 tonnes sold for the year.

The performance was divided into two distinct periods with very different operating environments. The first eight-month period (July 2020 – February 2021), was negatively impacted by delayed funding, COVID-19 impacts and excessive rain; and the last four-month period (March – June 2021), was a more stable production environment moving toward nameplate capacity.

According to Minergy CEO, Morné du Plessis, production and sales initially recovered in July and August 2020 with the easing of COVID-19 restrictions and recoveries were further bolstered by the successful launch of the rail siding. Delays experienced in concluding the funding contributed to contractors limiting operations to manage arrears.

“However, the heavy rains we experienced from December 2020 through February 2021 flooded the mine pit making access difficult and impacting both production and sales. Fortunately, the rain subsided in March 2021, and we entered a more stable environment, with a positive impact on operations. Good recoveries in production and sales were experienced during the last four-month period of the year, with the mine moving closer toward a breakeven position.”

“Despite these operational constraints, including the effects of COVID-19 on logistics and manning of shifts, we expect to reach consistent nameplate capacity in the 2022 financial year,” du Plessis added.

FINANACIAL REVIEW

In addition to the revenue reported above, the company incurred costs of sales of P256 million (2020: P150 million) with operating costs of P23 million (2020: P31 million). This effectively resulted in an operating loss of P86 million (2020: P100 million). Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million).

Du Plessis explains that the adverse conditions in the first eight-month period contributed to 86% of the gross loss, while the more stable four-month period alone contributed to 50% of total sales value, helping to decrease monthly gross losses, albeit below breakeven levels.

The company benefited from a strengthening in the South African Rand (“ZAR”) supporting higher back-on- mine sales prices.

“As announced, we’re pleased to have secured P125 million of additional convertible debt funding through the Minerals Development Company Botswana (Proprietary) Limited (“MDCB”). Minergy remains grateful for this support.”

He added that the first tranche of additional funding provided by the MDCB had been received in December 2020, which allowed Minergy to settle the majority of the contractor’s arrears and allowed their teams to be remobilised. The second and final tranche was paid post the financial year-end and will allow the business to reach nameplate capacity in the new financial year.”

COAL SALES AND MINE PERFORMANCE

Sales volumes increased by 110%, supported by increased sales in Botswana and internationally in South Africa and Namibia. Sales for June 2021 exceeded 56 000 tonnes, a record since the inception of the mine, with pricing increasing late in the financial year on the back of buoyant international prices and a strengthening ZAR.

Minergy also concluded a further 12-month off-take agreement to the existing off-take agreement, with a further agreement finalised post year end.

Overburden moved during the reporting period increased by 86% and extracted coal by 50%. Coal mined in June 2021 alone exceeded 100 000 tonnes. “This is a good performance considering the challenges faced such as sacrificing pre-stripping activities for a period to manage arrears, excessive rain and COVID-19,” du Plessis indicated.

“The wash plant was initially starved of coal due to the factors noted already. Despite this, overall plant throughput performance was 37% higher than 2020. Consistent output was supported by the completion of the Stage 2 rigid crushing section as well as the water saving dewatering screen with filter press contributing to a reduction in water usage of 60% per tonne of coal. A record throughput of more than 84 000 tonnes was achieved in March 2021 and this consistency has been maintained.”

OUTLOOK

According to du Plessis, the completion of Stage 4 of the Processing Plant, the rigid screening and stock handling section, remains a key optimisation step, which has associated benefits. “The completion was unfortunately delayed by a southern African wide shortage of structural steel but was commissioned post year-end.”

Minergy expects the positive momentum in international coal pricing for southern African coal to remain in place. Higher coal prices have resulted in coal being withdrawn from the inland market in favour of lucrative international markets. Du Plessis added that the regional market is currently under- supplied with sized coal, which supports higher pricing and new customer opportunities for Minergy.

“Our objective for the 2022 financial year is to achieve nameplate capacity by completing final ramp-up of operations. This will enable the company to generate sufficient cash flow to stabilise the business at breakeven or better. The bullish coal market is also providing support. COVID-19 will still be closely managed, and we look forward to the lifting of the State of Emergency, as announced, and trust that vaccination programmes will achieve herd immunity in Botswana during the next 12 months.”

Du Plessis expressed his excitement on prospects stating that, “The Eskom due diligence process is continuing, and we are hopeful of receiving feedback during the current financial year. In addition to this opportunity, Minergy is also investigating participation in the request by the Government of Botswana to provide a 300MW power station for which the company has been shortlisted.”

The approved process to issue shares for cash is showing positive leads and he concluded by saying that a listing in London is still being investigated.

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