FastJet Group announced plans on November 27 to dispose of its Fastjet Zimbabwe (FN, Harare Int’l) unit to a consortium led by the group’s biggest shareholder, Solenta Aviation Group, for USD8 million, so that the South Africa-based but London-listed firm can stay afloat until 2021. It blamed persistent volatility and uncertainty in the Zimbabwean market, a stock market update said.
If the restructuring plans fail to come to fruition by the end of February 2020, Fastjet warned it would not be able to continue trading as a going concern. The company’s shares fell by 32% to a record low after the announcement.
“The disposal, if agreed, approved, and implemented, would be expected to de-risk the significant uncertainty and cash drain that shareholders have historically suffered, and allow the group to continue operating under a more stabilised and simpler business model,” CEO Mark Hurst said.
The emergence of the plans come after Fastjet’s chief executive, Nico Bezuidenhout, left in July to take the helm at South African Airways low-cost subsidiary Mango Airlines (JE, Johannesburg O.R. Tambo). He had been seen as instrumental in reviving Fastjet’s flagging fortunes, having secured a deal to raise funds late last year that saved it from bankruptcy.
Having divested operations both in Tanzania, its former home market, and in Mozambique, Fastjet currently has operations in Zimbabwe and South Africa. It expects a loss after tax of between USD7 million and USD8 million for 2019, down from a USD65 million loss the previous year.
The carrier declared in June that it expected to be profitable on an underlying basis in 2019, with profit yielded from demand in both Zimbabwe and South Africa. Fastjet Zimbabwe currently operates a fleet of one E135 and five E145s.
After restructuring, the firm expects to become a capital-light business operating as a franchise house earning revenues through the FastJet brand and providing airline management solutions. It said it would also hold on to its investment in Federal Air (7V, Durban Virginia), a group subsidiary in South Africa that is due to be rebranded as Fastjet South Africa (7V, Johannesburg O.R. Tambo) in 2020.