Fastjet losses adds to pressure on African start-up

London
Source:
This story is sourced from Pro
See more Pro news »

African low-cost carrier Fastjet's directors have expressed strong reservations over the company's ability to survive, after it turned in operating losses of $53 million over an 18-month period.

Fastjet's revenues for the period, to 31 December 2012, reached only $21 million while operating costs hit $74 million.

In a financial statement the company acknowledges that it has operated at a loss, with a heavy cash outflow, since taking over the aviation division of Lonrho, including its Fly540 airline, in June 2012.

Fastjet replaced the Tanzanian operation of Fly540. It says the remaining Fly540 businesses, in Angola, Ghana and Kenya, have all "seriously underperformed".

Although the carrier has taken measures to preserve cash and seek additional finance - including a funding agreement with a US asset management firm - it says it needs to secure additional funding to "ensure operations can continue for the foreseeable future".

Fastjet could raise equity or dispose of affiliated shareholdings, it says. But it warns that various risk factors represent a "material uncertainty that casts significant doubt upon the group's ability to continue as a going concern", although it says its directors have a "reasonable expectation" that it will have access to "adequate resources" to continue.

The airline launched operations from Tanzania in November 2012

It says international route rights from Tanzania are "critical" to its success but have been held up by "bureaucracy and protectionism" - but expects them to be available in the next two months.

Fastjet's board also views South Africa as a "significant opportunity" and has been pursuing discussions with local entities to support market entry.