Posted on: 28 June 2016 by Mark Howells
Reporting on results for the first half of the 2016 financial year (1H16) at fastjet’s Annual General Meeting, the airline’s chairman Colin Child has said the trading environment in which it operates remains challenging.
He claimed although the yield per passenger continues to improve from its low point in October 2015, passenger numbers remain lower than expected. fastjet predicted it would carry 390,000 passengers during 1H16 in comparison to 363,726 the previous year, but load factors for the period have declined to 47% from 70% in 2015, reflecting the increase in capacity during the past 12 months. Child specified that while domestic routes within Tanzania are showing signs of recovery, international services remain difficult.
Child also stated that although Nico Bezuidenhout won’t take up his role as fastjet CEO until 1 August 2016, he has already worked with the board to identify opportunities to stabilise the business, through a review of the carrier’s fleet – in terms of size and the type of aircraft being operated – the routes flown, the relocation of fastjet’s head office to Africa and the exploration of new revenue generation initiatives.
The current cost reduction programme and recent reduction in routes and fleet size are yielding material benefits, yet Child confirmed fastjet continues to be cash flow negative. He continued that the carrier needs to raise further finances to provide essential working capital and effect the necessary changes to its operations to reduce costs further and to grow the business. The fastjet group has therefore commenced the initial phases of a fundraising exercise which it plans to complete during July 2016.