A “fundamental review” of the operations of African low cost carrier Fastjet is to be conducted by its new chief executive as it seeks new funding.
The disclosure came as it emerged that passenger load factors had slumped to 47% in the first half of the year against 70% in 2015.
Passenger numbers for the six months to June 30 are forecast to reach 390,000 from 363,726 in the same period last year.
New boss Nico Bezuidenhout is due to join Fastjet on August 1 but has already been working with chairman Colin Child to identify a number of opportunities “to stabilise the business and address many of the challenges” it faces.
Child will tell the airline’s annual meeting today: “These include a fundamental review of our fleet, both the size and type of aircraft operated, the routes flown, the relocation of our head office to Africa and revenue generation initiatives.”
Giving a trading update, Child will say: “The trading environment in which the company operates remains challenging.
“Although the yield per passenger continues to improve from its low point in October 2015 passenger numbers remain lower than expected. Whilst domestic routes within Tanzania are showing signs of recovery international services remain difficult.
“Although the ongoing cost reduction programme and the recent reduction in routes and fleet size are yielding material benefits the group continues to be cash flow negative.
“Accordingly, the company needs to raise further finance to provide essential working capital and also to effect the necessary changes to its operations, reduce costs further and pursue revenue generating initiatives to grow the business.
“The group has therefore commenced the initial phases of a fund raising exercise which it plans to complete during July 2016.
“The board believes that with a new CEO, who has a proven track record of successfully operating a low cost carrier in Africa, combined with a more pragmatic approach to operating the business, a much reduced cost base and management positioned in proximity to our markets and customers the group has a viable and attractive future.”
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