fastJet upbeat on future after Kenyan disposal

Low–cost African airline fastJet (LON:FJET) doubled revenues in 2013, but start-up costs and write-offs on its Fly 540 operation meant losses also climbed sharply.

Group revenues during the year rose 154% to US$53.4mln, of which US$26mln came from the core Tanzania operation.

Operating losses before one-offs were US$47.6mln, with US$21.9mln attributable to Tanzania while there was US$30mln of impairments at Fly 540. Pre-tax losses for the year rose to US$82.4mln (US$55.3mln).

The carrier announced on Wednesday it has sold its Fly 540 Kenya operation and with Fly 540 in Ghana and Angola suspended, the airline has effectively ended the link with the former Lonrho Aviation operation.

fastJet reversed into Lonrho Aviation in 2012 to set up hubs for a pan-African network, but Ed Winter, fastJet’s interim chairman and chief executive, conceded today its performance had been disappointing.

He also described the disposal of Fly 540 Kenya as a “hugely significant step” that frees the airline to focus on expansion in East Africa, where it sees Tanzania, Kenya, South Africa and Zambia as the major opportunities.

Since the year end, the group has re-financed with a £14.9mln placing while capacity has risen with total seats flown in May increasing 11% to 60,320 from 54,230 in April.

Year on year seats increased by 68% and revenue increased by 81% compared to May 2013, though the airline said while it could be profitable at current levels it needs more capacity to recover overheads and fixed costs fully.

A new international route from Dar es Salaam to Harare, Zimbabwe is now on sale, with first flights scheduled to operate on 2 August.

Winter said: “Our experience to date confirms our long-held view that people across Africa are embracing the opportunities offered by fasjet’s reliable, safe and great value air travel”.