Under pressure Fastjet to sell stake to Solenta
The London-listed low-cost carrier raises about $48m as part of its drive to stabilise its finances and reach breakeven by end-2017
Low-cost carrier Fastjet has agreed to sell a 28% stake to Johannesburg-based aviation group Solenta, as it seeks to stabilise its finances and reach breakeven by the fourth quarter of 2017, it said on Thursday.
The London-listed airline raised at least $48m on Thursday, including a $19.2m agreement with Solenta for discounted goods and services.
A further $28.8m had been raised through a share placement, the company said.
The airline signed a conditional agreement with Solenta for the provision and operation of three wet-leased aircraft and the supply of other services over the next five years. Solenta would have the right to nominate two members to the Fastjet board, which is expected to be strengthened by additional non-executive directors.
"Our agreement with Solenta represents a good operational and strategic fit. It provides Fastjet with access to fleet and related services which, together with the funds raised through our proposed placing, will allow us to successfully implement the final stages of our stabilisation plan," Fastjet CEO and interim chairman Nico Bezuidenhout said on Thursday.
The agreement with Solenta, which operates 49 aircraft in five countries, would provide a platform for further expansion, Fastjet said.
Fastjet, which operates mostly in East Africa, has been struggling to make a profit since its launch in 2012.
It posted a $31m loss in the financial year ended June 2016. It introduced its first routes to SA in 2016, but now only operates the Harare-Johannesburg route after the suspension of its Johannesburg-Victoria Falls route in December.
The expansion into SA of the Tanzania-based Fastjet followed Bezuidenhout’s appointment as CEO in June 2016. He assumed the chairmanship of Fastjet in November when the company announced it would seek to raise additional funds.
The company said at the time despite some success in its stabilisation plan, the cost of some of the leased aircraft had proved more onerous than expected.
African-based airlines are facing tougher operating environments than global peers, which the International Air Transport Association has attributed to, among other things, local conflicts and low commodity prices.
Iata said in December the industry globally was expected to return a profit of $29.8bn in 2017, although Africa, which has some profitable carriers, is forecast to buck this trend with a combined $800m net loss.