Fastjet nosedives at it warns over 2016
Updated : 08:28
Fastjet shares slumped on Thursday after the Tanzania-based budget airline posted a narrower loss the year to the end of December but said it expects to report a trading loss and to remain cash flow negative in 2016.
The operating loss from continuing activities narrowed to $37.9m from $43.9mn in 2014, while the loss for the year after tax narrowed to $16.9m from $58.5m.
Revenue rose to $65.1m from $53.8m and passenger numbers were up 32% to 787,771. However, the load factor at Fastjet Tanzania was down 6.6 percentage points to 66.7%.
Executive chairman Colin Child said: “2015 was a year of change and challenge for fastjet. We made progress in developing our Tanzanian operations, launching fastjet Zimbabwe and expanding into Kenya but revenues were impacted by a weakening Tanzanian economy and Tanzanian Shilling exchange rate and political uncertainty in the country.
“As a consequence of these macroeconomic pressures, consumer spending fell and this had a negative effect on ticket sales in the second half of the financial year.”
The company said it has taken action to mitigate the effects of the downturn, reducing operating costs and overheads by rationalising certain routes, cutting frequencies on particular routes and eliminating other underperforming services.
As a result of the downturn being more prolonged than expected, Fasjtet now expects to report a trading loss and to remain cash flow negative in 2016.
The company said that on current forecasts, it has sufficient funds to meets its operational requirements for the foreseeable future. However, the forecasts are sensitive inter alia to changes in passenger numbers, yields and foreign exchange rates.
“Accordingly, the board is considering a range of funding strategies in the short term, including asset sales, and expects to raise further funds in the near future to provide additional headroom and to ensure the company has the resources to fund future growth as markets improve.”
At 0826 BST, Fastjet shares were down 17.2% to 23.40p.