Low-cost African airline Fastjet Plc expects to be profitable on an underlying basis in 2019, Chief Executive Officer Nico Bezuidenhout said on Thursday, a year after a cash crunch nearly drove the carrier into administration.
The Johannesburg-headquartered airline, which operates in South Africa, Mozambique and Zimbabwe, has faced numerous issues related to its dwindling cash pile and was saved from going under after striking a deal to raise funds late last year.
Fastjet was also forced to divest operations in Tanzania, its home market, after battling tough trading conditions there.
“Last year we took a lot of pain. Aviation is a dragon slayer. Many a good company face difficulties in aviation,” Bezuidenhout told Reuters.
Profitability going forward depends on currency stability in Zimbabwe, where President Emmerson Mnangagwa is trying to repair an economy ruined by hyperinflation and a long succession of failed economic interventions.
“The variable for us is currency. Zimbabwe currency is still a risk,” Bezuidenhout said, adding that his profit prediction is cautious.
The company had an operating loss for continuing operations of $41.2 million in 2018.
The company was valued at 61.8 million pounds ($78.55 million) as of Wednesday.
Fastjet said profit for 2019 will be helped by demand in Zimbabwe and South Africa, while the powerful cyclones that hit Mozambique had hurt operations.
Fastjet, launched in 2012 and modelled on no-frills airlines such as easyJet Plc and Ryanair Holdings Plc, has been working to revive its fortunes.
The company has moved its headquarters to Johannesburg from London to cut costs, signed a code share partnership in Mozambique, changed auditors and cut its debt, Bezuidenhout said.
He added that liquidity was “tight as always” and the airline would need funding to expand and grow.
“You live and learn and there is a continent to conquer.”
Fastjet Loss Multiplies In 2018 On One-Off Costs But So Does Revenue
African airline Fastjet PLC said Friday its loss deepened significantly in 2018 as one-off costs hurt, despite revenue surging as it expanded its operations.
In 2018, pretax loss deepened to USD57.8 million from USD11.2 million the year prior. This was despite revenue rising to USD38.5 million from USD14.4 million the year before.
Profit performance was primarily hurt by a USD22.1 million exceptional charges related to shares transactions, impairments and other one-off costs.
"2018 saw the successful completion of the stabilization process we embarked upon in 2016," Fastjet Chief Executive Officer Nico Bezuidenhout said.
"It was a year during which substantial changes were implemented which will have long-lasting, structural benefits for Fastjet. Most notably, Fastjet withdrew from Tanzania - a market that had been consistently loss-making over a number of years - as well as completing its fleet transition, further reducing overhead costs, substantially reducing long-term debt, and replacing and enhancing our financial and management information core systems", Bezuidenhout continued.
"2018 also saw a strong performance from Fastjet's first full year of operations in Mozambique, the exercise of a purchase option that allows the group entry into the South African market through the acquisition of a shareholding in a profitable business in this country, and increased seat occupancy rates and revenue levels in our Zimbabwean business," Bezuidenhout added. "These efforts required commitment from all our stakeholders and significant time, effort and financial resource for which the management and board of Fastjet is thankful to our employees, investors, suppliers and customers."
"The Fastjet of today is a fundamentally different business to that of eighteen months ago, as evidenced by the group achieving operational profitability in two of its three markets for the last quarter of 2018," Bezuidenhout continued. "We remain focused on managing the macro-economic challenges confronting the business and on improving Fastjet's performance still further."
Shares in Fastjet were 1.5% lower at 1.60 pence in London on Friday.
Source: Alliance News Limited
By: Ahren Lester