Fastjet's losses deepen despite LCC stabilisation plan

Fast Jet A 319: With many of the A319 leases due by September 2016, Nico Bezuidenhout recommended that the airline switch to using Embraer E190s by the start of October 2016.


African low cost carrier Fastjet has seen losses almost double in what CEO Nico Bezuidenhout described as a “a challenging year”

Bezuidenhout has been leading a restructuring following a disastrous period of rapid expansion – that restructuring is still underway the company said as it announced the financial results today.

The airline has a four point plan to make the turnaround:

Major cost reductions
Fleet transition to smaller aircraft
Head office relocation to Johannesburg
Revenue initiatives including route rationalization

In its full-year results for 2016, it said losses before tax soared from $21.6m to $47.9m, as costs increased by 29% caused by increased capacity and start-up losses on new routes.

Bezuidenhout said: “2016 was a challenging year and these financial results reflect not only a difficult market place but also the overly optimistic expansion plan adopted in early 2015.

“Since I became CEO on 1 August 2016 we have successfully initiated a Stabilization Plan to address the immediate challenges. However, although good progress has been made many of the Plan’s benefits to reduce our cost base, and match capacity with demand, have naturally taken time to feed through and as such will only be materially realized in 2017.

Nevertheless, the effects of the Stabilization Plan in the second half of 2016 saw Fastjet withdraw from a number of loss-making routes and remove surplus capacity such that while between July and December, capacity was reduced by 25%, passenger numbers were only down by 3% and revenues rose by 5%.

“The final stages of the Stabilization Plan are now implemented and the strong progress we have made means that Fastjet’s cost base will be significantly reduced by the third quarter of 2017 and that we are well on the way to fulfilling our baseline aim of achieving a cash flow break even position by the fourth quarter of 2017.

Since the year-end, Fastjet has completed a US$28.8m fundraising, entered into a strategic and operational partnership with Solenta and significantly strengthened our Board. With these initiatives building on the benefits of the Stabilization Plan.

Although a number of challenges remain, Fastjet is now close to being sufficiently stable and well positioned to be able to consider disciplined growth opportunities in our target African markets.”

Source: http://www.africanaerospace.aero/fastjet-s-losses-deepen-as-lcc-continues-stabilisation-plan.html

Comments

Post a Comment

Popular posts from this blog

Sudan's Badr Airlines and Aloor Airlines partner for Juba ops

Image
Badr Airlines B737-300 Badr Airlines (J4, Khartoum) has resumed flights to South Sudan following the signing of a partnership agreement with South Sudanese operator Aloor Airlines (Juba). The Sudan Tribune reports Badr Airlines is slated to operate flights between the South Sudanese towns of Wau and Juba with an onward sector to the North Sudanese capital Khartoum. The first such service took place early last week using B737 equipment. Badr Airlines last served Juba between 2004 and 2011 when the city was still a part of the Republic of Sudan (today North Sudan). The flights ended in 2011 following South Sudan's independence and the subsequent escalation in tensions between the states over the oil-rich Kordofan border region. Badr Airlines also serves Cairo Int'l and Jeddah internationally with domestic destinations listed as Port Sudan, El Obeid, Damazin, El Fasher, Geneina, and Nyala. It currently operates one B737-300 and four B737-500s. Source:https://www.ch-
muxajax@blogger.com

Namibia's Westair Aviation acquires four ERJ-135s from HOP!

Image
Westair Aviation Logo Namibian passenger charter/ACMI specialist Westair Aviation (Windhoek Eros) has acquired four ERJ-135s from Air France subsidiary HOP!-Régional (YS, Clermont-Ferrand), the first of the type to feature in its growing fleet inventory. According to The Namibian newspaper, the aircraft in question are those which Air Namibia (SW, Windhoek Int'l) had been leasing from the French regional operator namely msn 145243, 145335, 145347, and 145252. They collectively average almost 17 years of age and are used on flights from Windhoek Int'l to Luderitz, Oranjemund, and Walvis Bay domestically as well as Harare Int'l and Victoria Falls in Zimbabwe and Lusaka in Zambia. They are also used on services from Walvis Bay to Cape Town and Johannesburg O.R. Tambo in South Africa as well as from Windhoek Eros to Mpacha, Ondangwa, and Rundu. As such, given the change in ownership, Westair Aviation has directed Air Namibia that henceforth its leasing payments are to
muxajax@blogger.com

Solenta Aviation takes SA Express to court over $6.5mn debt

Image
Solenta Avaiton Logo Solenta Aviation (SET, Lanseria) has taken South African Express (XZ, Johannesburg O.R. Tambo) to court over ZAR87.3 million rand (USD6.5 million) in unpaid leasing debts. Citing papers filed with the Gauteng High Court, Business Day reports the claim relates to fees due on three ERJ-145s South African Express wet-leased from Solenta between October 2016 and June this year. Court documents indicate the original ACMI lease contract was for three aircraft covering the period June to December 2016. The agreement was then extended by mutual consent to January of this year and then again from February 1 to July 31. SA Express was to pay Solenta USD300,000 per month for 150 guaranteed block hours for the initial contract which was then reduced to USD270,000 under the revised agreement. For any hours over and above the alloted 150, SA Express was to pay Solenta a rate of USD1,200 per hour under the original contract growing to USD1,300 under the revised agreemen
muxajax@blogger.com