SUMMARY: NO surprise! Fastjet of South Africa is on the brink of failure, without a cash immediate injection, as cash on hand is down to $US 3.3m, this airline’s LCC business model with A319’s was broken for years, then they abandoned the model for regional jet flying with 3 x ERJ-145’s and 2 x E190’s. With operations in Mozambique (under Solenta Aviation Mozambique), South Africa (“branding licence”? with Federal Airlines), Tanzania (Fastjet Tanzania 49% owned) and in Zimbabwe (FastJet Zimbabwe 49% owned) and still cannot make money, share price fell 70% today, and yet still the airline is valued at $US 29m seriously?

SEE:  https://www.linkedin.com/in/tomas-chlumecky-3200a021/

Fastjet warns it cannot continue without equity raising

Airline Economics Daily – June 27, 2018

Tomas’s Comment:

This is a sad story, the LCC model was a disaster, in 2016 it lost $US 48m on $US 68.5m in revenue? a -70% loss margin? what kind of business is that?

They found a good shareholder in South Africa’s Solenta Aviation, which is an operator and lessor and leased Fastjet its ERJ-145’s for a 28.48% share and let it use its Mozambique AOC, but they change ha snot change dits fortune, it had on June 18th, 2018 just $US 3.3m in the bank?

A little late to be calling out MAYDAY no? if you see you are in financial trouble don’t wait till the bank account is near zero! where is the proactive management of CEO Nico Bezuidenhout (ex-CEO of SAA’s LLC Mango) who took the helm, in August, 2016 promising big changes? and as I predicted here we are 22 months later and bankruptcy is around the corner?

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Fastjet, the low-cost African carrier backed by easyJet’s Sir Stelios Haji-Ioannou, has warned that it was at risk of going under if discussions with shareholders concerning equity funding were unsuccessful.

In a statement, the company said:

“The company is currently in active discussions with its major shareholders regarding a potential equity fundraising, in the absence of which the group is at risk of not being able to continue trading as a going concern.

“Whilst initial discussions with certain shareholders have been positive, discussions are ongoing and there can be no guarantee of a successful outcome.

“Fastjet expects that any equity fundraise will be tied up in conjunction with the announcement of the company’s annual results for the year ended 31 December 2017.”

The airline has a cash balance of $3.3 million, but $1.75 million is in restricted cash in Zimbabwe.

In April, Fastjet noted exceptional cash costs of $4 million incurred in December last year due to engine failure on an aircraft. In June, it announced that it had entered into unsecured loan agreements with third parties, Annunaki Investments (Private) and SSCG Africa Holdings, to free up the restricted cash held in Zimbabwe.

The loans are on commercial terms, for a period of six months and allow fastjet to lend $5m cash from fastjet Zimbabwe to Annunaki in return for a US$2m loan to fastjet from SSCG for general working capital purposes across the Group.

At the time, the airline stated that the intention was for each of the loans are repaid at the end of the six months unless the term is extended by mutual agreement by all of the parties.

Shares fell 67% to 5p in morning trading today, valuing the company at about £22m.