Fastjet goes into tailspin as cash SOS continues
The African budget airline says it is in urgent need of more cash within a month to keep operating
Bengaluru — Fastjet’s shares shed more than half of their value on Wednesday after the African budget airline said it needed more cash within a month for it to continue operating.
Fastjet, launched in 2012 and modelled on the likes of no-frills airlines easyJet and Ryanair Holdings, has been running short of cash for more than two years and it was unclear if investors will continue to back it.
"The company is currently in active discussions with its major shareholders regarding a potential equity fundraising, in the absence of which the group is not able to continue trading as a going concern," the airline said in a statement.
Fastjet’s shareholders include activist M&G Investment, Janus Henderson and South African carrier Solenta. It was founded by Haji-Ioannou, the son of a shipping magnate.
Fastjet added that talks with some shareholders had been positive and discussions were ongoing, though it did not guarantee success.
The budget airline has offered shares for cash at least twice in the last three months to meet its cash requirements, including last year to expand in SA and Mozambique.
In September last year, it looked to raise $44m but could only manage to raise $28m.
Fastjet, which operates in Tanzania, Zambia, Zimbabwe, Mozambique and SA, said it required more money by the end of October and said it was considering pulling out of its largest market in Tanzania.
Fastjet’s shares, which have fallen more than 16% this year, were down nearly 38% at midday.
The airline also posted a bigger half-year operating loss of $14.6m on Wednesday, from a loss of $13.2m last year.
The company said it was evaluating its Tanzanian operations and could cease operations in the country. Fastjet said the impact on the country’s operations from changes in the competitive landscape had been significant.
Tanzania, where Fastjet has struggled in the face of tough conditions, brings in almost 70% on Fastjet’s revenue, according to Thomson Reuters Eikon data.
Its operations in the country include domestic routes from its Dar es Salaam base to Kilimanjaro, Mbeya, and Mwanza with international routes to Tanzania from Lusaka in Zambia and Harare in Zimbabwe.