The chairman of ailing African budget carrier Fastjet has resigned as it emerged that the airline needs a further cash injection.
Non-executive chairman Colin Child, who led a fund-raising exercise in July, said it would not be appropriate for him to continue in the role given that more funds are being sought sooner than expected.
EasyJet founder Sir Stelios Haji-Ioannou, who holds a 12.6% stake in Fastjet, called for the removal of Child in May.
New chief executive Nico Bezuidenhout will assume the role of interim chairman pending the appointment of a new chairman “in due course”.
The airline is in the process of replacing Aibrus A319s with smaller Embraer E190 aircraft, cutting routes and frequencies. The head office is being transferred from London to Johannesburg in a move expected to be “substantially completed” by March 2017. This will result in head office cost savings of 35%.
An estimated $8 million of costs is expected to be stripped out of the airline in the first quarter of 2017.
But Fastjet said in a trading update this morning: “Although the Company has made good progress in executing the stabilisation plan, and Fastjet is entering its busiest trading period, additional costs associated with delivering the stabilisation plan, in particular the cost and terms associated with returning leased aircraft being more onerous than previously expected, has placed greater strain on available cash-resources.
“For this reason, as well as allowing the company to pursue possible synergistic opportunities identified by the CEO, the company needs to raise further capital and expects to initiate a fundraising exercise which it plans to complete in Q1 2017.”
Bezuidenhout said: “Since my arrival in August, the company has made substantial progress in implementing the stabilisation plan and has, in the process, resolved and attended to the key financial, contractual and structural legacy matters that would otherwise have served to impede the future performance of the company.
“The journey has not been a straightforward one but with our costs due to substantially reduce in the new year as various legacy and restructuring costs come to an end, with our revenue generating initiatives beginning to bear fruit and with various geographic and strategic expansion opportunities being identified I am confident that, with the necessary capital, the company can break even by the fourth quarter of 2017, and be well-positioned to pursue sustainable growth and value-creation for shareholders going forward.”
He added that he was” convinced of the tremendous market opportunity there is for a truly pan-African low cost carrier”.
Child said: “Although the trading and operational environment has been challenging I have much enjoyed my time on the Fastjet board.
“I leave the board with an extremely good and experienced CEO in place and I have every confidence that he will successfully complete the stabilisation plan and pursue some exciting strategic initiatives that will allow Fastjet to deliver its full potential.”
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