Fastjet finalising talks to sell its Zimbabwe business. “The directors believe, based on current financial projections and funds available and expected to be made available, that the group will have sufficient resources to meet its operational needs until the end of March subject to forecast revenues not being impacted by any unforeseen circumstances,” said the company in trading update on Monday.
Fastjet says it is finalising discussions with an investor consortium led by biggest shareholder Solenta Aviation to acquire the group’s Zimbabwe operations. Solenta Aviation Group holds a 29% stake in Fastjet Plc. Fastjet, which has operations in Zimbabwe and South Africa, previously said it continues to be making losses.
Further funding will be required by the end of February 2020 to enable the group to continue operating in its current form.
Following continued losses of US$2.4 million in the first half of 2019 and the ongoing oversupply of available seats by other carriers, last month, fastjet decided to suspend all flight operations in Mozambique. It is projected that costs related to the suspension of flight operations in Mozambique including refunds will amount to around $150k.
The restructured firm will become a capital-light business operating as a franchise house that would earn revenues through the Fastjet brand and provide airline management solutions, while also continuing to hold its investment in the FedAir business.
“The Investor Consortium is finalizing its due diligence on Fastjet Zimbabwe and securing the required regulatory approvals.” Also, the group is seeking to establish the extent of any outstanding contingent or other liabilities and related transactional costs which may or may not be material to the group.
“The final negotiations with the investor consortium including the final consideration payable will be concluded once this exercise is completed. While discussions with the investor consortium are ongoing there can be no guarantee of a successful outcome,” it said, adding that if the group is unable to carry out the restructuring proposal by the end of March 2020 it would be unable to continue trading as a going concern.
Meanwhile, Fastjet said it is still evaluating the impact of the Zimbabwe Supreme Court judgment of 20 January 2020 which states that all US dollar domestic debts incurred before 22 February 2019 can be discharged using the US$:RTGS$ rate of 1:1.
Trading to the year-end, including through the peak holiday season, was in line with management’s expectations as previously announced. Revenue including fastjet Zimbabwe is poised to be US$42 million in 2019 from US$39 million in 2018 with a loss after tax of US$7-8 million. In 2018, it recorded a loss of US$65 million.
As at 23 January 2020, the group had cash reserves of US$3 million with no restricted cash. Of the group’s cash reserves, US$700 000 is in Zimbabwe and currently unrestricted. Since commencing operations fastjet has flown over 3.5 million passengers and has established itself as a punctual, reliable, and affordable low-cost carrier.
Zimbabwe currently has 11 regional and international airlines flying into Zimbabwe; Emirates, Ethiopian Airlines, RwandAir, Kenya Airways, South African Airways, South African Airlink, Air Namibia, TAAG Angola, Malawian Airlines, Air Tanzania and Comair. But, there are two domestic players; Air Zimbabwe and FastJet Zimbabwe.
Source – Bulawayo24 News
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