Fastjet hits back at media for being to harsh on it, yet while no one can be as bad as Fastjet was in 2016, with an operating loss of $US 63.9m (yes, -48% operating loss margin) operating 3 x A319’s, things have not changed much since August 1, 2017. The airline received $US 72.8m in new investment in 2017 and had an operating loss of $25.3 million and in that 18 months it has burned it all away with a smaller fleet (3 x ERJ-145, 2 x E190)? yes it reduced expenses, off course with smaller aircraft, but burning cash at $4.0m a month one has to really ask is this ‘new’ business model any better? as load factor is 71% and revenue per seat of just $60.90 means its yield is way too low, again another carrier offering LOW FARES, but NOT a LOW COST CARRIER! and PRASK is well below CASK, and they want more money? seriously?

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Tomas’ Comment:

They can paint a rosy picture, but it has been under a turnaround since August, 2016, so 22 months of restructuring they should be further along in their recovery, but they are not and yes they have down-gauged to much smaller (3) ERJ-145’s and (2) E190’s from 3 (A319’s), so off course costs will come down from smaller aircraft, so the below claims of cutting costs 48% to $$US 70.7m are deceiving.

They are using their HORRIBLE 2016 financial results for comparison, so it may look good, but it is NOT, in 2016 they had $US 68.5m in revenue, $US 132.4m in operating expenses, for a huge operating loss of $US 63.9m (-48% loss margin), I have seen nothing worse than that in my 30+ years in his business, operating loss last year was $25.3 million, still a loss.

In the end, they have still needed $72.8m in new funding in 2017 alone, so the new business model is not working yet, and while load factor is a good 71% their revenue per seat $US 60.90 is very low, which I can tell you means their yield is very low, filling the plane with low fares but they are not a low-cost carrier, the unit operating costs of a 50 passenger ERJ-145 are not cheap, and they are flying on dangerous ground as PRASK<CASK, and that means trouble.

They do not have a long-term sustainable business model still today if you cannot make money, what is the point of being in business? and to throw good money away on a money-burning operation makes no sense, look 5 aircraft and they went through $US 72.8m in new cash between January 2017 and now, that is 18 months, so burning $US 4.0m per month on a small operation of 5 aircraft?

Sorry, its BS, the numbers just do not justify this operation continuing, yes they have changed their business model, they had to and they have the lessor of the ERJ-145’s as 28.48% owner, which helps, and I bet there is a lot of money owing there.

They criticize the media for being harsh? my god, this is an awful operation still, no matter how you look at it.

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Just in are the results Fastjet PLC has filed this morning, a regulatory requirement by the London Stock Exchange where the company is listed.
The report covers the financial year between 01st of January and the 31st of December 2017 and reads as follows:

Final results for the year to 31 December 2017

Strategic highlights

· Strategic and operational partnership agreed with Solenta Aviation Holdings Ltd;

· Purchase of fastjet brand from easyGroup, enabling future brand licence agreements and greater operational flexibility;

· Market entry into Mozambique via a brand license agreement with Solenta Aviation Mozambique; and subsequent MoU signed with LAM – Mozambique Airlines, S.A;

· Brand license agreement with Federal Airlines, giving fastjet access to an AOC for South Africa, to commence in-country services by early 2019;

· Board re-shaped and strengthened during the first-half of 2017;

· Fundraising of US$28.8m in January 2017 and US$44m in September 2017, reflecting ongoing shareholder confidence in fastjet’s strategy; and

· fastjet named Leading Low-Cost Airline in Africa at the 2017 World Travel Awards and Best Low-Cost Airline, Africa, at the 2017 Skytrax Awards.

Financial and Operational highlights

· Successful implementation of Stabilisation Plan comprising:

o Network rationalisation and right-sizing of capacity to better suit fastjet’s markets;

o Fleet transition to smaller E190 and E145 aircraft together with the planned introduction of three 70-seater ATR 72 turboprop aircraft during September 2018;

o Cost savings realised from supplier renegotiations and organisational changes following the relocation of fastjet’s Head Office to Johannesburg; and

o Additional revenue generating initiatives including introduction of a new Central Reservation System and improved travel agent distribution capability.

· The positive impact of the Stabilisation Plan helped fastjet to deliver:

o Operating loss down 61% to US$25.3m (2016: US$65.6m), after one-off costs of US$6.9m associated with an unexpected engine event and a US$2.5m bad debt write off;

o Revenue per seat up 30% to US$60.9 (2016: US$46.9)

o Load factor up 17 percentage points to 71% (2016: 54%); and

o Costs reduced by 48% to US$70.7m (2016: US$136.2m).

Nico Bezuidenhout, Fastjet’s Chief Executive Officer, commented as follows earlier this morning:

“In 2017, the successful implementation of our Stabilisation Plan saw us realign our network, withdraw from loss making routes, reconfigure our fleet, migrate the Group’s headquarters to Africa, and significantly reduce our cost base. These actions have resulted in a substantially reduced loss for 2017. The purchase of the fastjet brand from easyGroup in the second half of 2017 was an important milestone for the Company which has allowed us to explore new avenues for growth and given us greater operational flexibility, particularly in terms of the type of aircraft we operate.

As part of our targeted network expansion strategy, the first fastjet branded flight in Mozambique took off last November and over the next 18 months we have a programme of further measured expansion of services in Mozambique and, subject to appropriate fleet expansion, new services in South Africa.

We are proud that fastjet has managed to restructure its operations in a relatively short space of time and simultaneously continued to provide our passengers with a truly excellent service.

Although the Group is operating on a more stable footing the Board has been reviewing further funding options. Over recent days we have made very good progress in discussing a further equity investment with our major shareholders, and the Board can confirm that it has received non-binding indications of interest from existing and potential new investors to invest, in aggregate, not less than US$10m (??) further details of which are expected to be announced today. Understandably this process has caused delays in finalizing and publishing these results.

I am confident that healthy GDP growth, improved trading and expected passenger growth across our markets will all play a significant role in fastjet’s development during 2018. This, together with the planned introduction of our new ATRs, expected further network growth in Mozambique and the ongoing impact of the Stabilisation Plan, should enable fastjet to be cashflow positive during the second half of 2018 and will drive our continued progress as Africa’s leading low-cost airline.”

Fastjet’s report and accounts for the year ended 31 December 2017 (“2017 Report and Accounts”), notice of a General Meeting (“GM”) and the form of proxy are expected to be posted to shareholders on 30 June 2018.