Fastjet to raise more funds amid challenging markets

Tanzania-based budget airline Fastjet said on Tuesday that it needs to raise further finance to provide essential working capital and effect the necessary changes to its operations as the trading environment remains challenging.

The company said it has begun the initial phases of a fundraising exercise, which it plans to complete next month.

Fastjet said that although the yield per passenger continues to improve from its low point in October 2015, passenger numbers are still lower than expected. Whilst domestic routes within Tanzania are showing signs of recovery international services remain difficult.

The company expects passenger numbers of 390,000 in the first half ending 30 June compared to 363,726 in 2015, but said load factors have dropped to 47% from 70%, reflecting the increase in available capacity in the last 12 months.

Fastjet said the cost reduction programme and route reductions introduced recently are bearing fruit but the company remains cash flow negative, which is why it needs to raise further finance.

“The board believes that with a new CEO, who has a proven track record of successfully operating a low cost carrier in Africa, combined with a more pragmatic approach to operating the business, a much reduced cost base and management positioned in proximity to our markets and customers the group has a viable and attractive future.”

At 0910 BST, Fastjet shares were down 12.6% to 24.90p.