Fastjet Group is predicting full-year net losses of $7-8 million, which it attributes to volatility affecting its Zimbabwean operation, a division it is looking to divest.
Fastjet Group is predicting full-year net losses of $7-8 million, which it attributes to volatility affecting its Zimbabwean operation, a division it is looking to divest.
Although operational performance has improved, and revenues for the first 10 months of this year increased by 20% – to just over $34 million – the company remains loss-making.
Fastjet Group says its FedAir operation is “resilient” and is set to generate a profit this year.
But the introduction of a new Zimbabwean currency earlier this year, and devaluation of the previous one, has contributed to difficult trading for its airline operation in the state.
Fastjet Group has faced problems across multiple airline operations as the company attempted to establish itself as a pan-African budget airline.
It sold its Tanzanian airline operation in November last year, as strong competition from Air Tanzania exacerbated poor financial results – this former operation was recently placed into liquidation after a creditor application to a local court.
Fastjet Group then suspended its airline division in Mozambique over increasing losses, and planned to concentrate on its Zimbabwean arm and the establishment of South African services.
But the problems in Zimbabwe have put further financial pressure on the company, and it is looking at selling the division to investors in order to raise capital.
Fastjet Group says it had cash reserves of $3 million on 21 November, of which $800,000 was in Zimbabwe.
Selling the Zimbabwean operation would “de-risk the significant uncertainty and cash drain” and allow Fastjet Group to continue operating under a “simpler” business model, says chief executive Mark Hurst.
If the divestment proposal is accepted Fastjet Group would emerge as a franchise operation offering the brand and management services to the Zimbabwean division and other African carriers.
