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Travel Radar - Aviation News > News > FastJet set to sell Subsidiary

FastJet set to sell Subsidiary

Luke Will
Last updated: 4 December 2019 09:06
By Luke Will 3 Min Read
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FastJet is an ambitious African based LCC | (c) CH-Aviation
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FastJet, a pan-African operating Low Cost Carrier (LCC), is set to sell off their Zimbabwe based subsidiary, following restructuring of the airline; Restructuring thought to be done to cut costs, and thus save the carrier.

FastJet is a small African based LCC utilising a small fleet of 4 aircraft, all Embraer E145 jets with a seating configuration of 50 passengers. Despite ambitious plans of expansion to become “Africa’s LCC”, the carrier has been notably slacking behind, even having to return it’s leased Airbus A319 example, as it failed to fill the enhanced seating capacity.

The carrier had to return it's single A319 | (c)Bloomberg

Previously, the carrier had expanded into four African countries: South Africa, Zimbabwe, Tanzania and Mozambique, however as of recent, they have scaled-back the number of routes to four, across two countries.

 

So, what is this sale?

FastJet’s plan is to sell of control of it’s Zimbabwe based subsidiary, with the potential to buy back the controlling share in the future, once operations are more stable. Chief Finance Officer, Kris Jaganah, issued the following statement:

The group will have sufficient resources to meet its operational needs until February 2020, However, the headroom of available cash resources is minimal, and the projections are very sensitive to any assumptions not being met. If the group is unable to carry out the restructuring proposal by the end of February 2020, it would be unable to continue trading as a going concern.

These plans have led to some questions to arise about the carrier, since the subsidiary currently operates 75% of the route network and is already 60% owned by Solenta Aviation Holdings – the potential buyer of the remaining 40% of shares. The sale would raise $8million (USD) of funds for the carrier, allowing ‘breathing space,’ of capital expenditure,  during times of upcoming financial hardship between 2020-2021. 

FastJet's route network | (c) FastJet

Jaganah added:

The disposal would also relieve the group of c.$5.4 million of current liabilities and c.$3.2 million of future aircraft capital expenditure, which will be raised and funded by the new investor consortium directly. In addition, the group would be granted an option to buy back its shareholding in Fastjet Zimbabwe on the same divestment economics to which it would be sold, three to five years after the effective date of the sale.

The sale would see operations by the subsidiary continue under a ‘Contractor Airline’, but for how long is the question. Are we on the brink of loosing another carrier with extensive future plans? Let us know in the comments below!

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Luke Will
By Luke Will
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Editor in Chief - Contributing to the aviation news and investigative journalism sections of Travel Radar, Luke brings a rich understanding of the commercial aviation and air-travel industry to his reporting.
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