Fastjet in talks to sell Zimbabwe operations for much-needed cash
The low-cost carrier is looking to sell part of the business to a consortium led by its biggest shareholder Solenta Aviation for $8m
Bengaluru — Fastjet said on Wednesday that it is in talks to sell its Zimbabwean operations to a consortium led by its biggest shareholder Solenta Aviation for $8m, a deal which could help the SA low-cost carrier stay alive until 2021.
The company, which saw its shares plummet 32% to a record low after the announcement, said it is also in talks with some of its major shareholders for a cash call.
Fastjet said if the restructuring plans do not pan out by the end of February, the Africa-focused company will not be able to continue trading as a going concern.
The proposals come after Fastjet lost its CEO Nico Bezuidenhout — a turnaround specialist — to SA’s Mango Airlines in July. Bezuidenhout was instrumental in reviving Fastjet’s fortunes and shoring up its dwindling cash pile, as it was saved from going under after striking a deal to raise funds late in 2018.
The company was also forced to divest operations in Tanzania, its home market, after battling tough trading conditions there.
Fastjet, which has operations in Zimbabwe and SA, said it continues to be loss-making and is expecting a loss after tax of about $7m to $8m for 2019, compared with a loss of $65m a year earlier.
The company cited persistent volatility and uncertainty in the Zimbabwean market for the shortcoming.
The low-cost airline said in June that it expects to be profitable on an underlying basis in 2019. It said then that profit will come from demand in Zimbabwe and SA, while the powerful cyclones that hit Mozambique had hurt operations.
The restructured firm will become a capital-light business operating as a franchise house that will earn revenues through the Fastjet brand and provide airline management solutions, while also holding its investment in the FedAir business, it said on Wednesday.
“The disposal, if agreed, approved and implemented, would be expected to de-risk the significant uncertainty and cash drain that shareholders have historically suffered and allow the group to continue operating under a more stabilised and simpler business model,” CEO Mark Hurst said.
Fastjet, launched in 2012 and modeled on the likes of no-frills airlines easyJet and Ryanair, has been struggling with its cash needs for the last few years.