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Commentary: Eye-watering Figure on Capital Erosion in Commercial Aviation

We have been busy crunching the numbers and came across a very meaningful statistic for current and potential investors that may want to establish a carrier, it should also be a wake up call for the many African countries scrambling to launch National Carriers.

In the last 3 years, the value of any investment in Fastjet has fallen 94%!

Yes, if you had invested $1 dollar in the London listed carrier, operating as a low cost carrier in East Africa, your investment would now be worth $0.06.

As we always advise our clients and potential investors, aside from the glamour, commercial aviation can be financially punishing if you do not understand the fundamentals, have a sound business plan and efficient management team to run the business.

Fortunately, we now think that this is the right time to invest in Fastjet as things just can't get any worse but would caution that any investment would be highly speculative without a major rethink in strategy.

To date, major investors have been patient and have continued to back the numerous rights issues and capital raising exercises launched by the company but surely the investment managers are also accountable?

dre aviation is ready to support any activist shareholders that may force the Board to rethink their strategies and embark on a major restructuring programme for the carrier, in our opinion this is the only way this issue plagued carrier will survive. Shareholder activism is rarely seen in commercial aviation but with such pitiful performance for a UK listed company, its time to sit up and force a change.


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