Fastjet looks to sell Zimbabwe arm to avert funding crisis

African budget carrier Fastjet Group is considering selling its Zimbabwe airline operation to raise capital, after disclosing that it is facing more funding pressure.

Fastjet Group says it needs to raise funds by the end of February next year or it will be unable to continue trading as a going concern.

“The headroom of available cash resources is minimal, and the projections are very sensitive to any assumptions not being met,” it says.

It has entered discussions with certain shareholders to explore options to restructure the company or secure a capital injection.

The restructuring proposal would involve divesting the Fastjet Zimbabwe division to a consortium which would be led by Solenta Aviation Holdings – the majority shareholder of Fastjet Group.

This consortium would also comprise local Zimbabwean investors.

Divestment would generate a consideration of $8 million from this consortium, says Fastjet Group, and relieve it of some $5.4 million in liabilities as well as $3.2 million of aircraft capital expenditure.

The proceeds would be used to settle current liabilities and provide working capital sufficient to fund the company into the 2021 fiscal year.

This proposal would mean Fastjet Group – which has already divested its Tanzanian division and suspended its Mozambican arm – would effectively become a franchise house.

It would generate revenues through the Fastjet brand and providing airline management services to other independently-owned carriers in Africa.

“The group would aim to only own airlines once they were cash-generative and profitable,” says the company, enabling it to avoid start-up costs and the uncertainties of operating in Africa.

Initial discussions on the proposal have been “positive”, it claims.

Fastjet Group would be given the option of returning as a shareholder by re-acquiring its stake in the Zimbabwean operation within three to five years. It would also continue to hold an interest in the FedAir operation.