Fastjet losses cause shares to nosedive

The value of shares in budget airline, Fastjet, fell yesterday after it reported deepening losses and a reduction in its cash pile.

The negative results reported by the British-based holding company for a group of low-cost carriers that operate primarily in Africa are believed to be the result of the failure of its ambitious drive to fly more planes.

The airline reported operating losses for the first half of this year of $31m, almost three times as high as its $12.8m loss in the same months last year. This meant that its pre-tax profit of $6.4m in the first half of 2015 has translated to a loss of $15m for the first six months of this year.

As a result, the company’s stock fell by more than 17 percent to £0.2095p following the announcement. The company’s reduction in cash has also caused concern, falling from USD71m in June last year to $3.9m by the end of the first half of 2016. However, the company has since raised a further $20m to gain some breathing space.

Gerald Khoo, an analyst with Liberum was quoted in The Telegraph, saying: ‘Challenging economic conditions in Tanzania and overly ambitious capacity growth resulted in a collapse in load factors. Neither passenger numbers nor revenue kept pace with the additions to seat capacity, and losses have grown.’ He added that that the airline’s ‘substantial’ 61 percent increase in seating capacity in the first half ‘was not a commercial success’. This was due to a reduction in its load factor.

Fastjet Offers New Routes on Sale

Fastjet, a new airline offering low cost services to Africa, is offering airfares from its first base in Tanzania.

The airline is expected to commence its operations from November 29, 2012, from Dar es Salaam, to Kilimanjaro and Mwanza.

The airline has recently acquired three Airbus A319 aircraft, that will be operated by Rubicon Diversified Investments, a UK-based holding company, in consultation with Sir Stelios Haji-Ioannou, founder of Easyjet, a UK-based low cost airline.

Fastjet chief executive officer, Ed Winter, said, ‘Air travel is no longer an exclusive option for a small minority in Tanzania. Fastjet will make flying an affordable option for more Tanzanians than ever before, bringing new opportunities for trade, leisure trips, and family visits.’

We have had a great response to our first tickets going on sale with over 100 seats sold within the first two hours for flights departing from November 29.’

The airline tickets are currently available on sale through its newly launched website, fastjet.com, as well as through local travel agents in Africa.

Fastjet has also announced its new brand, which replaces an existing logo with an African Grey Parrot. The new logo echoes the mission, ethics and target audience of the airline.

Winter added, ‘The African Grey is renowned for its intelligence and is therefore a perfect personification of Fastjet’s motto; smart travel. We are delighted to be unveiling this new branding today, which better reflects our individual corporate identity and speaks to our key audiences.

We hope that our friendly new mascot and logo will soon become universally recognized as symbols of reliability, efficiency and safety.’

The airline chairman, David Lenigas, said, ‘We are excited that the launch is now imminent and that Fastjet will be turning from a concept into a reality.’

However, responding to media scrutiny, he added: ‘A recent story emanating from East Africa and picked up by the Daily Telegraph contained material inaccuracies regarding disputes with two Fly540 (Kenya) suppliers. Whilst we are not able to comment directly on these specific cases, we can confirm that the amounts in dispute are not deemed material, and that we will vigorously defend the company’s interests as these cases progress. Our shareholders would expect us only to settle invoices that are accurate and appropriate.

The launch of Fastjet has generated enormous interest in East Africa and we are delighted with the strong partnerships being forged with suppliers and Governments across the region.’

Fastjet to Commence Operations in October

Fastjet, a new airline that will be offering low-cost services to Africa, is due to be launched in October 2012.

The airline will be operated by Rubicon Diversified Investments, a UK-based holding company, in consultation with Sir Stelios Haji-Ioannou, founder of Easyjet, a UK-based low-cost airline.

Fastjet has recently entered into an agreement with Airbus to lease A319 aircraft for the launch of its services.

Ed Winter, the chief executive officer of Rubicon Diversified Investments, said, ‘The decision to launch FastJet with the Airbus A319 enables us to expand rapidly with each aircraft potentially carrying around 250,000 passengers a year. Rubicon expects passenger capacity to double from current levels within six months of the introduction of the A319 fleet.

We plan to add at least five leased Airbus A319 aircraft to the fleet within six months of launch and up to 15 within a year.’

Commenting on the agreement, John Leahy, Airbus chief commercial officer customers, said, ‘We are delighted that FastJet has chosen the A319 as the basis for its fleet, a further endorsement for the efficiency and reliability of Airbus’ market leading single aisle family of aircraft.

FastJet will open up low cost travel to the African market, and the Airbus A319 will bring new levels of comfort to air passengers across Africa. It is a great combination.’

David Lenigas, executive chairman of Rubicon and of Lonrho Plc, stated, ‘FastJet has already stated its intent to raise the bar on air safety in Africa by operating its aircraft under the same strict rules that apply to European carriers. To this end, we expect to sign an agreement with a major European MRO (Maintenance, Repair and Overhaul) company for the maintenance of its new A319 fleet in the coming months.’

FastJet will be operating under a licensing agreement with easyGroup Holdings Limited.