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Fastjet’s hope for profit pinned on Zimbabwe currency: CEO

Low-cost African airline Fastjet Plc expects to be profitable on an underlying basis in 2019, Chief Executive Officer Nico Bezuidenhout said on Thursday, a year after a cash crunch nearly drove the carrier into administration,

The airline, which operates in South Africa, Mozambique and Zimbabwe, has faced numerous issues related to its dwindling cash pile and was saved from going under after striking a deal to raise funds late last year.

Fastjet was also forced to divest operations in Tanzania, its home market, after battling tough trading conditions there.

“Last year we took a lot of pain. Aviation is a dragon slayer. Many a good company face difficulties in aviation,” Bezuidenhout told Reuters.

Profitability going forward depends on currency stability in Zimbabwe, where President Emmerson Mnangagwa, who replaced longtime leader Robert Mugabe after an army coup in November 2017, is trying to repair an economy ruined by hyperinflation and a long succession of failed economic interventions.

“The variable for us is currency. Zimbabwe currency is still a risk,” Bezuidenhout said, adding that his profit prediction is cautious.

The company had an operating loss for continuing operations of $41.2 million in 2018.

The company is valued at 61.8 million pounds ($78.55 million) as of Wednesday.

Fastjet said profit for 2019 will be helped by demand in Zimbabwe and South Africa, while the powerful cyclones that hit Mozambique had hurt operations.

Fastjet, launched in 2012 and modeled on no-frills airlines such as easyJet Plc and Ryanair Holdings Plc, has been working to revive its fortunes.

The company has moved its headquarters to Johannesburg from London to cut costs, signed a code share partnership in Mozambique, changed auditors and cut its debt, Bezuidenhout said.

He added that liquidity was “tight as always” and the airline would need funding to expand and grow.

“You live and learn and there is a continent to conquer.”

Source: Reuters

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