African budget operator Fastjet Group has obtained a commitment from its main shareholder, Solenta Aviation Holdings, to underwrite a capital raise of at least $1.5 million, providing the company with much-needed funding.
Fastjet Group has been struggling with dwindling cash resources as it copes with flight restrictions in Zimbabwe and South Africa. It had reserves of $1.3 million in mid-August but $600,000 of this is linked to its FedAir operation and cannot be lent to any other Fastjet Group entity.
Although there are signs that travel restrictions are easing, the company says it needs at least $1.5 million in additional cash before November 2020.
Solenta has told Fastjet’s board that it would be prepared to underwrite such a capital increase, on terms that have still to be negotiated.
Fastjet Group says that, if it obtains this capital, and further funds are obtained through a legacy loan facility, and flight operations restart by December, then it expects to be able to continue operating as a going concern at least until the end of 2021 – if passenger demand returns quickly enough.
The company had been planning to divest its Fastjet Zimbabwe operation to a consortium led by Solenta, but the sale has been held up by the air transport downturn.
Fastjet Group says it will “re-assess” the proposed divestment to examine “whether this option remains attractive” given the delays and the impact of the coronavirus situation.