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Johannesburg - Fastjet, the London listed company, which last week postponed its Johannesburg to Dar es Salaam flights, has posted an eye-watering operating loss of $39m (roughly R399m) in the 6 months to the 30th June 2013.
Most of the losses occurred in its start-up operations in Tanzania; although the legacy Fly540 turbo-prop operations it purchased from Lonrho Aviation also lost $6m.
Whilst these interim results are unaudited, in the notes to the results Fastjet reminds investors that for the prior year’s results auditors had drawn attention to a “material uncertainty over Going Concern without qualifying their report”.
There are a lot of costs in the start-up phase, but even when stripping out the exceptional items Fastjet is still left with a loss $25m before exceptions. The cashflow statement is probably most telling, with a $21m outflow from their bank accounts being financed through the issuing of new shares (this is not a free lunch, as existing shareholders end up being diluted).
At June 30 2013 they were sitting with $4m in their bank account.
Fastjet PLC plan on taking “increasingly aggressive steps to restructure” their Fly540 turboprop operations in Angola, Ghana and Kenya. At the same time as reducing their Fly540 operations, they plan on introducing international flights from Dar es Salaam to Johannesburg, Malawi and Zambia. In Tanzania they are commencing flights to Mbeya on the 1st November.
A major aim is to get their Tanzanian operations profitable, and they reported some progress with an EBIT loss of $9m in the Q1 reducing to $4m in Q2.
The improvement was on the back of load factors increasing from 66% in January 2013 to 78% in June 2013 and revenue per passenger from $46 to $81 (of which their revenue from baggage and flight change fees increased from $3 to $6 per passenger).
Fastjet plan on introducing revenue from ancillary sources by introducing in-flight retail, allocated seating, hotel & travel insurance services.
And once Tanzanian operations are profitable, Fastjet plan on returning their attention to South Africa.
“Regional routes from South Africa to Sub-Saharan destinations lack effective competition and are both underserved and overpriced and ready for an alternative to the cosy relationship between South African Airways and the respective national carrier of each country.
"It can cost the same amount to fly direct between two Southern African cities on a flight of 3-6 hours as it does to fly to Europe on a 10-12 hour flight.”
- Fin24
* Rob Baker is co-owner of South Africa Travel Online. Follow him on twitter on @southafricaTO.
Most of the losses occurred in its start-up operations in Tanzania; although the legacy Fly540 turbo-prop operations it purchased from Lonrho Aviation also lost $6m.
Whilst these interim results are unaudited, in the notes to the results Fastjet reminds investors that for the prior year’s results auditors had drawn attention to a “material uncertainty over Going Concern without qualifying their report”.
There are a lot of costs in the start-up phase, but even when stripping out the exceptional items Fastjet is still left with a loss $25m before exceptions. The cashflow statement is probably most telling, with a $21m outflow from their bank accounts being financed through the issuing of new shares (this is not a free lunch, as existing shareholders end up being diluted).
At June 30 2013 they were sitting with $4m in their bank account.
Fastjet PLC plan on taking “increasingly aggressive steps to restructure” their Fly540 turboprop operations in Angola, Ghana and Kenya. At the same time as reducing their Fly540 operations, they plan on introducing international flights from Dar es Salaam to Johannesburg, Malawi and Zambia. In Tanzania they are commencing flights to Mbeya on the 1st November.
A major aim is to get their Tanzanian operations profitable, and they reported some progress with an EBIT loss of $9m in the Q1 reducing to $4m in Q2.
The improvement was on the back of load factors increasing from 66% in January 2013 to 78% in June 2013 and revenue per passenger from $46 to $81 (of which their revenue from baggage and flight change fees increased from $3 to $6 per passenger).
Fastjet plan on introducing revenue from ancillary sources by introducing in-flight retail, allocated seating, hotel & travel insurance services.
And once Tanzanian operations are profitable, Fastjet plan on returning their attention to South Africa.
“Regional routes from South Africa to Sub-Saharan destinations lack effective competition and are both underserved and overpriced and ready for an alternative to the cosy relationship between South African Airways and the respective national carrier of each country.
"It can cost the same amount to fly direct between two Southern African cities on a flight of 3-6 hours as it does to fly to Europe on a 10-12 hour flight.”
- Fin24
* Rob Baker is co-owner of South Africa Travel Online. Follow him on twitter on @southafricaTO.
