Low-Cost Airline Fastjet May Terminate its Tanzanian Operations

African low-cost carrier Fastjet (LON: FJET), with operation in Tanzania, Mozambique, South Africa, Zambia, and Zimbabwe, could cease operations in Tanzania, its largest market, due to the continued losses in this operation.

The company’s latest Interim Results for the six months to 30 June 2018 show that total revenues reached 30.1 million while operating losses reached USD 14.6 million.

Fastjet explains that the Tanzanian market and economy are struggling with an ingrained “below cost yield” embedded into the fare structures and competitors, continue to be expected by travelers and offered by the market and our competitors.

Commenting on the results, fastjet Chief Executive Officer Nico Bezuidenhout said: “Despite achievements in Zimbabwe and Mozambique, the company continued to face several challenges during the period and early part of Q3 2018, with regulatory delays in Tanzania and a sub economical yield environment, and because of this, we have been unable to deploy our newly-acquired ATR72-600 aircraft as quickly as anticipated or planned. Slowed economic growth in Tanzania has also adversely impacted consumer and business travel revenue and the first half of the year saw the available customer pool in-market contract.”

The Directors of the company are still encouraged by trading in the Zimbabwean and Mozambique markets, but the headroom of freely usable and available cash resources is minimal and the company’s ability to continue as a going concern remains very sensitive to its future funding requirements. This is why additional funding will be required by the end of October 2018 to enable fastjet to continue operating and the company is currently in active discussions with its major shareholders regarding a potential equity fundraising.