fastjet, the African value airline for everyone, announces its unaudited Interim Results for the six months to 30 June 2018, together with strategic and operational developments to date in 2018.
The table below shows the financial performance highlights of the fastjet Group for the period to 30 June 2018.
Highlights
· Revenue growth is driven by capacity and fleet increases year on year following Stabilisation Plan adjustments initiated in 2017;
· Successful capital raise of $10m in July 2018 to fund working capital for current operational period;
· Recent changes in the competitive landscape in Tanzania have caused the Board to evaluate fastjet's Tanzanian operations and the consequential financial impact of continued losses in this operation, which could include ceasing operations in country;
· The Directors 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; and
· Additional funding will be required by the end of October to enable fastjet to continue operating; The Company is currently in active discussions with its major shareholders regarding a potential equity fundraising, in the absence of which the Group is not able to continue trading as a going concern. Whilst initial discussions with certain shareholders have been positive, discussions are ongoing and there can be no guarantee of a successful outcome.
Operational Headlines
· Fleet adjustments year on year delivering clear benefits as revenue per available seat kilometre increased by 34% due to:
o Growth in yields of 23% year on year;
o Growth in passengers carried of 19% year on year;
o Growth in load factors of 10% year on year;
· Tanzanian market and economy struggling with an ingrained "below cost yield" embedded into the fare structures and competitors, continue to be expected by travellers and offered by the market and our competitors;
· In addition, regulatory delays have impacted us significantly with inability to deploy our ATR72-600 fleet there still;
· Mozambique as our newest market, launched only in November 2017, is showing good growth potential with strong government and regulatory support to welcome and support fastjet into Mozambique; we achieved a 67% load factor during the first half of 2018, encouraging and justifying fastjet to add further capacity on existing routes, and start new routes, after less than a year of operation.
· Zimbabwe experienced significant revenue growth of 123% year on year, driven by passenger growth of 70% year on year on the back of a 70% capacity increase, and yield growth year on year of 32%; all these were achieved by vastly increased frequencies on the core Johannesburg-Harare and Harare-Victoria Falls routes, with the smaller gauged ERJ145 50 seater fleet;
· A new full content agreement with Africa's leading Global Distribution System (Travelport) has ensured fastjet inventory availability through the majority of travel agents in key markets;
· Network on-time performance at 85% monthly aggregate;
· Further interline agreement signed with Qatar Airways in process of implementation;
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. Other factors impacting fastjet's performance include interest payments on legacy debt from several years ago and the start- up losses in Mozambique (1H 2018 - loss (US$ 2,668,000); 1H 2017 - US$ 0).
Operating costs such as fuel and maintenance were negatively impacted by currency fluctuation and a rising global fuel price; both the South African Rand and the Tanzanian Shilling lost value against the US Dollar.
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.
Recent changes in the competitive landscape in Tanzania, and the associated impact on the Tanzanian airline and local company have been significant.
Non-executive director Mark Hurst has recently engaged more actively, temporarily assisting and supporting myself in implementing the Company's strategic plan within all core markets and having these divided equally between us from a leadership and guidance perspective."