Fastjet Plc, an African airline launched in 2012, shed more than half the value of its shares, when it revealed its need for more cash within a month in order for it to continue operating. The African budget airline, which was modelled on the likes of easyJet Plc airlines and Ryanair Holdings Plc, has been running out of cash for more than two years.
A statement released by the airline said “the company is currently in active discussions with its major shareholders regarding a potential equity fundraising, in the absence of which the group is not able to continue trading as a going concern”. The airlines shareholders include M&G Investment, Janus Henderson, and South African carrier Solenta.
The airline, which was founded by Haji-Ioannou, the son of a shipping magnate, added that talks with some shareholders had been positive and discussions were ongoing. It was however noted that the meetings did not guarantee success.
Fastjet has offered shares for cash at least twice in the past three months to meet its cash requirements. In September 2017, the company looked to raise $44 million but only succeeded in raising $28 million. Fastjet, which operates in Tanzania, Zambia, Zimbabwe, Mozambique and South Africa, admitted it required more money by the end of October 2018 and was considering pulling out of Tanzania, the company’s largest market.
The airline’s shares have also fallen over 16 percent and it posted a bigger half-year operating loss of $14.6 million in 2018, up from a loss of $13.2 million in 2017.
Fastjet has struggled in the face of tough conditions in Tanzania, which brings in almost 70 percent of the airline’s revenue. Its operations in the country include routes from its Dar es Salaam base to Kilimanjaro, Mbeya and Mwanza, with international routes to Tanzania from Lusaka to Zambia and Harare in Zimbabwe.