Page 32 - World Airnews Magazine January 2020 Edition

AIRLINES

FASTJET EMBRAER E145

By Victoria Moores

frican LCC fast jet needs to
Arestructure by February 2020,
if it is to continue as a going concern,

with the disposal of fast jet Zimbabwe
forming part of its survival plan.
“The group will have sufficient re-

sources to meet its operational needs

until February 2020,” fast jet CFO Kris

Jacana said in a recent statement.
“However, the headroom of available
cash resources is minimal, and the pro-

jections are very sensitive to any as-

sumptions not being met. If the group
is unable to carry out the restructuring
proposal by the end of February 2020,
it would be unable to continue trading

as a going concern.” age its key intellectual property of its

The company is now in active equity and FedAir business, the fastjet brand and brand and airline management solutions
restructuring discussions with its major fastjet Africa (which incorporates the and invest in viable, already established
shareholders, which have responded posi- fastjet Central Systems business unit) airlines where it can.”
tively to the proposals. and which also owns fastjet Mozam- Over the 10 months to Oct. 31, 2019

bique. The group would be contracted
Fast jet originally launched with a by fastjet Zimbabwe to continue provid- fastjet’s revenue rose by 20.5% to (US)
Tanzanian airline in November 2012. The ing the fastjet brand and airline-man- $34.1 million. The company also made “sig-
group previously had airlines in several agement services,” fastjet said. nificant financial and operational improve-

African countries, but this presence has This would turn the group into a “cap- ments,” which are expected to cut full-year
since been slimmed down to Zimbabwe net losses to (US) $7-$8 million, narrowed
(fast jet Zimbabwe) and South Africa ital-light” business. Revenues would be from (US) $65 million in 2018.
(Fed Air). generated by the company operating Fastjet Zimbabwe’s revenues also rose
as a “franchise house,” comprising the
The most recent airline to suspend fastjet brand and airline-management despite difficult trading conditions, after

operations, on Oct. 26, was fastjet Mo- services. the Reserve Bank of Zimbabwe introduced
zambique. “The group’s strategy is to focus on a new currency which devalued the existing

One option is to sell fastjet Zimbabwe to franchise and providing airline manage- currency by up to 15 times and pushed

Solenta Aviation Holdings and a consortium ment solutions to additional airlines in inflation above 200%.

of local Zimbabwean investors, raising Africa that are independently owned, FedAir’s operations are “resilient” and

approximately (US) $8 million. Solenta Avi- enhancing its overall revenues from expected to be profitable for the year,

ation Holdings already owns around 60% of these. Additionally, the group would aim although this stability has been offset by

fastjet Group. to only own airlines once they were cash continued volatility and uncertainty in

“The disposal would also relieve the generative and profitable, [thus] avoid- Zimbabwe.

group of c. $5.4 million of current liabilities ing the initial costs and significant cash Fastjet also clarified that its former

and c. $3.2 million of future aircraft capital losses through the airline start-up phase Tanzanian airline, Fastjet Airlines, which
expenditure, which will be raised and fund- and from operating in Africa’s some- was recently placed into liquidation was no

ed by the new investor consortium directly. times uncertain trading environment,” longer part of the group.

In addition, the group would be granted Jaganah said. Fastjet Air TZ, which owned 49% of fastjet

an option to buy back its shareholding in Fastjet CEO Mark Hurst said, “The Airlines Ltd, was sold in November 2018.
fastjet Zimbabwe on the same divestment disposal, if agreed, approved and imple- “For clarity, this liquidation order does

economics to which it would be sold, three mented, would be expected to de-risk not relate to the company or group itself

to five years after the effective date of the the significant uncertainty and cash and is restricted to divested fastjet Air-

sale,” Jaganah said. drain that shareholders have historically lines,” Jaganah said.
Funds generated by the disposal suffered and allow the group to continue As of Nov 2019, the group as a whole had
would be used to settle group liabilities operating under a more stabilized and cash reserves of (US) $3 million, $400,000
and to provide working capital into simpler business model. This revised less than the same time the previous year.

fiscal 2021. strategy allows the group the oppor- (See story on page 31) Q
“Upon completion of the restructur- tunity to create a single fastjet brand Article courtesy: https://atwonline.com/

ing, the group would then consist of the throughout key markets in Africa lever- airlines/fastjet-restructure-february-2020
World Airnews | January 2020
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