Fastjet delays expansion as it issues profit warning

Fastjet delays expansion as it issues profit warning

African low-cost carrier Fastjet is delaying the start of operations in Zambia and Zimbabwe until later this year as it issued a profit warning.

Interim chairman, Clive Carver, said: “As a result of slower-than-anticipated route development and the impact of weak African currencies, in particular the Tanzanian shilling against the US dollar, we now expect trading in the second half of 2015 to be materially behind management's expectations.

The disclosure came as the airline confirmed a reduction in first half pre-tax losses to $9 million from $13.9 million in the same period in 2014.

Revenues for the first six months of the year rose to $31.5 million from $19 million as passenger numbers grew by 56% to 363,769.

Fastjet confirmed the addition of its first owned aircraft, bringing the fleet up to six, and may add more before the end of the year.

Chief executive, Ed Winter, said: "Using the same assets as in H1 2014, three Airbus A319s, in H1 2015, through better utilisation we increased the number of seats flown by 56%, total revenue increased by 66% and operating losses reduced by 26%; a great achievement.

"Since then, in Q3 2015, we have doubled the size of the fleet to six and are well on our way to having three bases, Tanzania, Zambia and Zimbabwe fully operational by the end of the year. This expansion of the fleet and network is particularly important in laying the foundations for profitable growth in 2016.

"Whilst we have seen these very significant improvements, African currencies have lost considerable value against the US dollar, which combined with a worldwide reduction in commodity prices, has caused an economic downturn in both Tanzania and Zambia.

“In addition, the start of operations in Zambia and Zimbabwe has been delayed into Q4. Accordingly the board has downgraded its forecast for full year 2015 but is confident of meeting its expectations for 2016."

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