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Low-cost carrier Fastjet to fly for one more week



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Low-cost carrier Fastjet says it has $6.8 million in its accounts — which is just enough to fly to Tanzania, South Africa, Mozambique, Zambia and Zimbabwe up to the end of the week.

The airline said that if its cash position does not improve, it will formally hire insolvency advisers.

The airline, which began operations on the continent 16 years ago with the aim of becoming Africa’s leading low-cost carrier, said it faces closure because of delays in the completion of a Solenta Aviation Holdings Ltd subscription letter.

Through a disclosure statement at the London Stock Exchange, Fastjet Plc said that it had a balance of $6.8 million, of which $6.4 million was restricted cash held inside Zimbabwe.

Last month, South Africa-based Solenta had agreed to buy more than 316.7 million Fastjet shares for a total of $4.1 million, which was preconditioned on GE Capital Aviation Services (Gecas), an Irish-American commercial aviation financing and leasing company, amending two existing Embraer 190 leases to Fastjet Africa.

However, the sale is yet to happen, denying the firm close to $0.7 million through an open offer for its ordinary shares.

The sale would have seen Solenta increase its shareholding to a majority of 54.6 per cent, and raise voting shares to more than 60 per cent.

“The company is continuing to take action with a view to enabling the Gecas condition to be satisfied in the next seven days.

Accordingly, it has deferred application for the admission of the new ordinary shares to be issued pursuant to the equity refinancing and the open offer,” Fastjet directors said in a trading update.

Despite considerable effort, the Gecas condition has not yet been satisfied, although the airline hoped to have reached a settlement by last Friday.

The statement on reaching a new lease agreement with Gecas comes from Fastjet’s recent decision to exit its Dar unit entirely, selling its shareholding but remaining in the country through a branding agreement.

“While discussions to date with the relevant stakeholders have been positive, they are ongoing and there can be no guarantee of a successful outcome. The company is continuing to take action with a view to enabling the Gecas condition to be satisfied in the next seven days,” the airline said.

If Fastjet is unable to satisfy the Gecas condition, the equity refinancing and open offer will not be completed and the airline will be unable to continue trading.

“The directors would have no choice but to formally engage insolvency practitioners to explore restructuring options (including administration) and to commence discussions with interested parties for the sale of the business and assets of the company,” Fastjet said.

Meanwhile, Fastjet Tanzania chairman Lawrence Masha has upped his stake in the new outfit, from four per cent to 68 per cent after he bought 47 per cent of the company’s shares owned by local investors and 17 per cent owned by Fastjet Plc, becoming the majority shareholder and owner of the unit.

His partner is the South African Hein Kaiser.

In November, Fastjet Plc said it was disposing its 49 per cent stake in its loss-making Tanzanian subsidiary Fastjet Airlines Ltd due to a difficult operating environment.

The Dar operator will be left with little muscle to compete with the government-backed Air Tanzania.

“We are now an independent Tanzanian unit and are looking for strategic investors so as to continue to expand within the country,” said Lucy Mbogoro, the firm’s public relations and marketing executive.

The Tanzanian unit, which generated revenue worth $15.7 million in the six months to June this year, posted a loss of $8.9 million in the same period.

The parent firm, Fastjet Plc, has struggled to raise sufficient funding from its shareholders in the past year, having successfully raised $28 million in September last year out of the $44 million it had targeted in fresh capital, as its shareholders became increasingly reluctant to invest in the business.

It had previously raised $19.8 million in July 2016, and $28.8 million in January last year.

The airline has gone through financial instability, having tapped shareholders for $10 million in July to fund working capital for the current operational period, against its operational costs that ran to $25.8 million in the first six months of this year.
By the end of September, its cash reserves stood at $4.2 million, with $2.8 million held inside Zimbabwe.

The remaining $1.4 million was external hard currency within the group, which it said would not be enough to continue operating the business into the fourth quarter of this year.

In the six months to June, Fastjet Plc saw its revenue increase 42 per cent to $30.1 million on the back of year-on-year capacity and flight increases.

However, its group operating losses increased by 13.4 per cent to $14.7 million.

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