Fastjet Group has set its sights on entering the South African market in 2019 after having secured approximately USD10 million dollars worth of fresh capital.
Following a warning to shareholders last week that it was facing a catastrophic funding crisis, the African low-fare carrier group said on Friday, June 29, that it had now successfully placed 66,495,310 new ordinary shares, priced at GBP0.08 (USD0.11) per share, to raise GBP5.3 million pounds (USD7 million). It also reached a deal with its largest singular shareholder, Solenta Aviation Group, wherein the South African ACMI/charter specialist subscribed to 28,924,538 new ordinary shares raising gross proceeds of GBP2.3 million (USD3 million).
With Solenta Aviation Group’s increase in shareholding, the CEO of Solenta Aviation, Mark Hurst, will join Fastjet’s board as a Non-Executive Director where he will be working closely with CEO, Nico Bezuidenhout, on an ongoing basis. A Zimbabwean, Hurst will also be responsible for the country management of Fastjet’s Zimbabwe and Mozambique operations.
The two transactions combined, Fastjet says it raised gross proceeds of GBP7.6 million (USD10 million). As of June 18, Fastjet’s cash balance stood at just USD3.3 million.
In its recently published FY2017 results, Fastjet issued a further update on its stabilization plan given what it said was the “challenging” current economic and trading outlook for its Tanzania, Zimbabwe, and Mozambique (through Fastjet Mozambique) operations.
In the short-term, the Group has deferred the induction of its three ATR72-600s until September of this year. The Avions de Transport Régional turboprops will likely be deployed into service with Fastjet (FN, Dar-es-Salaam) to cater to the Tanzanian market as well as with Fastjet Zimbabwe (FN, Harare Int’l) where the carrier has now been granted rights to the Harare Int’l–Bulawayo route, previously the sole preserve of Air Zimbabwe (UM, Harare Int’l).
In light of the difficult outlook for operations north of the Limpopo River, the Group has now turned its attention to the South African market where, earlier this year, it commenced the process of exercising its option to acquire local carrier and brand licensee, Federal Air (7V, Durban Virginia).
“The intention, beyond this current financing, is for the Company to explore financing and/or joint venture options in South Africa to support full-scale entry into that market,” it said. “As the largest aviation market in Africa, the Board believes that South Africa, particularly routes to and from Cape Town, is[sic] strategically important to Fastjet, which can utilise the current FedAir platform as well as fastjet management’s relations and track record in the country.”
The FedAir acquisition is dependent on all relevant South African regulatory requirements being met and completed. The Group expects to commence Fastjet South Africa-branded services in South Africa no later than early 2019, subject to obtaining the suitable additional aircraft for its fleet and the associated financing.