Fastjet, the low-cost African airline, has provided an update on trading, the proposed restructuring of the Group and the Group’s capital requirements following the announcement on 27 November 2019.
Trading to the year end, including through the peak holiday season, was in line with management’s expectations as previously announced. Revenue including fastjet Zimbabwe is expected to be US$ 42m (2018: US$ 39m) for the year ended 31 December 2019 with a loss after tax of US$ 7m to US$ 8m (2018: loss of US$ 65m).
As at 23 January 2020, the Group had cash reserves of US$ 3.0m with no restricted cash. Of the Group’s US$ 3.0m cash reserves, US$ 0.7m is in Zimbabwe and currently unrestricted.
Capital Requirements and the Restructuring Proposal
As previously announced the Board expects further funding will be required by the end of February 2020 to enable the Group to continue operating in its current form. The Directors believe, based on current financial projections and funds available and expected to be made available, that the Group will have sufficient resources to meet its operational needs until the end of March subject to forecast revenues not being impacted by any unforeseen circumstances.
To address this funding requirement the Group remains in active discussions with an investor consortium led and underwritten by Solenta Aviation Holdings Limited and other local investors in Zimbabwe (the “Investor Consortium”), in relation to the disposal of the Group’s holding in fastjet Zimbabwe (the “Disposal”).
The Investor Consortium is finalizing its due diligence on Fastjet Zimbabwe and securing the required regulatory approvals. The Group is also seeking to establish the extent of any outstanding contingent or other liabilities and related transactional costs which may or may not be material to the Group. The final negotiations with the Investor Consortium including the final consideration payable will be concluded once this exercise is completed. Whilst discussions with the Investor Consortium are ongoing there can be no guarantee of a successful outcome. If the Group is unable to carry out the restructuring proposal by the end of March 2020 it would be unable to continue trading as a going concern.
The Group is still evaluating the impact of the Zimbabwe Supreme Court judgement of 20 January 2020 which states that all US dollar domestic debts incurred before 22 February 2019 can be discharged using the US$:RTGS$ rate of 1:1.
photo: Anna Zvereva