Understandable public anger

In the ten years from 2008 onwards the banking sector was constantly in the spotlight. Blame for the financial crisis and concern regarding controversial government bailouts were followed by public outrage about inflated bonuses, money laundering and false reporting. Over this period, banks deployed a range of legitimation strategies to salvage their reputation. This paper proposes a modified typology of legitimation strategies based on previous research (van Leeuwen and Wodak 1999; Vaara, Tienari and Laurila 2006), and examines how these are used by in the “letter to shareholders” published by the chairs of the five main UK-based banks over the ten years following the crisis. The strategies are analysed in terms of their object, target and interdiscursive features, and the particular persuasive roles of narrative and emotion are underlined.

Flight Status— ‘Grounded Indefinitely’: An Analysis of the Impact of COVID-19 on Commercial Aviation

Since the unexpected eruption of COVID-19, travel has been heavily circumscribed by governments in an endeavour to curb the spread of the virus. This research study aimed at conducting a case-study analysis of the impact of the Coronavirus on the commercial aviation industry. It analysed changes in international passenger capacity from originally planned in a sampling of countries from different regions, from January to April 2020, to measure the impact of the pandemic on commercial aviation. The data for capacity change were regressed against days of lockdown and days of global travel ban to determine the extent of their impact. Qualitative data was also analysed to provide a multi-faceted picture. The study found that COVID-19 had a huge influence on commercial aviation during the period observed. Moreover, the restrictions implemented by governments were found to exert a statistically significant impact on the industry, accounting for 84% of the impact on the change in international passenger capacity. The equation generated provides a predictive tool for determining changes in passenger capacity in the foreseeable future if similar restrictive policies are imposed. A qualitative analysis of the context also reveals that airfares will fall in the short run as airlines compete to regain customers, but rise in the long run. The paper thus highlights the importance of government bailouts and the relaxation of specific rules to support airlines during these challenging times. Other necessary measures identified include fleet re-purposing, as well as the institution of additional safety measures to encourage air travel.

The annihilation of time by space in the COVID-19 pandemic downturn

A defining feature of capitalism has been its ‘annihilation of space by time’ in the constant reduction of geographical barriers to rapid exchange. Overviewing how the COVID-19 pandemic lockdown has triggered a financial crisis staunched only by massive government bailouts, this commentary points to a need to orient analysis to the annihilation of time by space.

Government assistance to state-owned enterprises: a hindrance to financial performance

This study aimed to examine whether government financial assistance influences the financial performance of state-owned enterprises. Commercial state-owned enterprises in South Africa that are listed under the Public Financial Management Act during the post-apartheid era from 1995 to 2017 were sampled. Government guarantees were measured as a dummy variable, while financial performance was measured by accounting measure: return on assets (ROA). Endogeneity issues were addressed, and data analysis was performed on an unbalanced panel using the two-step system GMM. The empirical evidence indicated that support by the government in the form of guarantees and subsidies has a significant negative effect on the financial performance of state-owned enterprises. This is an indication that continued government bailouts to poor performing state-owned enterprises exacerbates their poor financial performance and encourages these enterprises to become too reliant on government assistance, burdening the national fiscus. AcknowledgmentsThe author gratefully acknowledges the National Research Foundation of South Africa for the research grant and Dr Farai Kwenda for his supervision during the study.

South Africa

Subdued private investment and exports, and increased uncertainty have depressed growth and worsened social indicators. State-owned enterprises’ (SOEs) risks are materializing, triggering government bailouts of Eskom and administrative intervention in other entities. High fiscal deficits have boosted debt. Nonresident investors are shedding equities and local currency bonds but showing appetite for foreign currency sovereign bonds amid supportive global financing conditions. The external position is moderately weaker than implied by fundamentals and desirable policies. Inflation has slowed to around the mid-point of the target band, aided by one-off factors, but inflation expectations are higher. Banks are sound, albeit with pockets of vulnerabilities.

South Africa’s national airline faces key reform test

Subject SAA business rescue. Significance State-owned South African Airways (SAA) was placed into business rescue on December 5, as the government attempted to avoid the likely shutdown and disorderly liquidation of the debt-ridden and technically bankrupt airline. Business rescue involves temporary management control by ‘business rescue practitioners’ (third-party supervisors) with wide restructuring powers, curtailment of influence of other stakeholders and a temporary moratorium on creditors' rights. The government hopes by these means at best to restructure SAA as a going concern or, failing that, to provide for its orderly liquidation by negotiation with stakeholders, including creditors. Impacts A restructuring plan involving continued government bailouts for SAA will undermine Pretoria’s proposals on reining in public debt. Liquidation would pose risks for other indebted parastatals given cross-default clauses in SAA’s financing and leasing agreements. The outcome of the business rescue will be keenly watched by markets as a test of Pretoria's resolve to reform and restructure parastatals.

Business in times of crisis

Government bailouts of corporate sectors in the COVID-19 crisis are part of a tripartite arrangement between government, business and institutional investors. Business should respond to the changing preferences of customers, employees and societies by identifying value propositions that justify the provision of risk capital by institutional investors. Critical to this is the determination and implementation of corporate purposes by owners and board directors that focus on inter-generational horizons. Family owners are particularly well placed to do this, but institutional investors need to make it part of their stewardship function as well. Measurement is key and significant reforms are required in the areas of accounting, valuation and reporting. Consistent with these observations, companies that had strong environmental, social and governance records performed better during the initial stages of the crisis, as did family owned firms and those that avoided high levels of leverage prior to the crisis.