28th Jun 2016 08:03
LONDON (Alliance News) - fastjet PLC on Tuesday said the trading environment in which it operates in Africa remains challenging, with lower-than-expected passenger numbers and a decline in load factor in the first half of 2016.
Shares in fastjet were trading down 13% at 24.90 pence on Tuesday morning.
The low-cost airline said that while the yield per passenger continues to improve from its low point last October, passenger numbers numbers remain lower than expected. Domestic routes within Tanzania are showing signs of recovery, but international services remain difficult, fastjet said.
Some 390,000 passengers are forecast to have travelled with fastjet in the six months ending June 30, up from 363,726 in the first half of 2015, but load factor declined to 47% from 70%, which fastjet said reflects the increase in its available capacity over the past year.
fastjet added it has been working with soon-to-be Chief Executive Nico Bezuidenhout, who is joining the group on August 1 from Mango Airlines, in identifying a number of opportunities to stabilise the business and address many of the challenges it faces.
These include a fundamental review of the fleet, both the size and type of aircraft operated, the routes flown, the relocation of the head office to Africa, and revenue generation initiatives.
Bezuidenhout was appointed as CEO earlier this month after former CEO Ed Winter resigned a week after the group had issued a profit warning for 2016, which he blamed on "prolonged" challenges facing the African aviation industry leading to a dip in passenger numbers.
A call for Winter's resignation had been made by billionaire investor Stelios Haji-Ioannou, the owner of easyGroup Holdings Ltd which owns a 13% stake in fastjet.
fastjet also said it has commenced the initial phases of a fundraising exercise, which it plans to complete in July. This is in order to raise finance to provide "essential" working capital, as well as to effect the changes to operations, reduce costs further and pursue revenue generating initiatives to grow the business.
"The board believes that with a new CEO, who has a proven track record of successfully operating a low cost carrier in Africa, combined with a more pragmatic approach to operating the business, a much reduced cost base and management positioned in proximity to our markets and customers, the group has a viable and attractive future," Executive Chairman Colin Child said ahead of fastjet's annual general meeting on Tuesday.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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