TIDMFJET
RNS Number : 1294Q
Fastjet PLC
25 November 2016
fastjet Plc
("fastjet" or the "Company")
(AIM: FJET)
Trading Update and Directorate Change
25 November 2016
fastjet (AIM:FJET), Africa's low-cost airline, today provides an
update on current trading and its operations, in particular the
progress it has made with its Stabilisation Plan and the Company's
current outlook.
STABILISATION PLAN
Fleet
Further to the operational fleet update on 3 October 2016, the
Company has continued to implement the Stabilisation Plan and is
transitioning its fleet from the existing 145-seat A319 aircraft to
smaller aircraft, initially through short term wet leases
(aircraft, crew, maintenance and insurance), to be superseded by
dry leases (aircraft only) in the start of H2 2017. Material
progress has been made and two-thirds of the Company's A319
aircrafts have now been removed from fleet and the first wet-leased
Embraer e-Jet E190 aircraft was introduced in Tanzania during
October 2016.
Based on initial experience with the aircraft the Board remains
confident that the original expectations of a 10 - 15% reduction in
operating cost will be achieved whilst seat occupancy rates on
flights conducted with the E190 has to date showed an 18-percentage
point increase and average yields have increased by approximately
12%.
Rationalisation of routes
The Company has continued the process of assessing its route
network and has aggressively rationalised routes and/or reduced
frequencies to more sustainably match supply levels with demand.
This process is nearing completion, with rationalisation of flight
activities between Tanzania and Kenya, Tanzania and Uganda as well
as between Tanzania and Zimbabwe taking effect on 5 December 2016.
Service frequency between Harare, Zimbabwe and Johannesburg, South
Africa, has been increased whilst services between Johannesburg and
Victoria Falls, Zimbabwe, will be suspended as from next month. The
remaining routes within Zimbabwe and Tanzania, and between these
countries and South Africa, are all projected to positively
contribute to fixed cost during December 2016 and will continue to
be closely monitored thereafter.
Organisation
The process of relocating the Company's Head Office function
from London to Johannesburg has commenced, and is expected to be
substantially completed by March 2017, with timings influenced by
contracted notice periods and business continuity in critical
functions. In this regards the Company expects annualised Head
Office cost-savings of c.35% whilst achieving increased
responsiveness to Passenger needs, resulting from being in closer
proximity to the Company's operating markets.
The Company has furthermore embarked on an organisational
restructuring process in both Zimbabwe and Tanzania, the
consequence of which is a substantial reduction in the size of our
expatriate workforce in these countries and a greater reliance on
local talent, which will result in significant cost savings.
Revenue generating initiatives
The Company has successfully integrated a Global Distribution
System (GDS) which facilitates access by Travel Agencies to
fastjet's inventory, generated its first passenger-flows from its
interline agreement with Emirates, and introduced new fare products
aimed at connecting the various fastjet routes into single
passenger journeys. These measures, along with continued leverage
of fastjet's growing social media presence, has supported revenue
generation despite a reduction in seats flown.
OUTLOOK
Based on the steps taken in stabilising the business, we expect
Q1 2017 to show a c.25% reduction in fixed operating cost &
overheads year on year and a c.35% reduction in variable operating
cost year on year, in aggregate amounting to c. US$8m and
contributing to a significant improvement in Q1 2017 performance
relative to the current year. Although the Company has made good
progress in executing the Stabilisation Plan, and fastjet is
entering its busiest trading period, additional costs associated
with delivering the stabilisation plan, in particular the cost and
terms associated with returning leased aircraft being more onerous
than previously expected, has placed greater strain on available
cash-resources. For this reason, as well as allowing the Company to
pursue possible synergistic opportunities identified by the CEO,
the Company needs to raise further capital and expects to initiate
a fundraising exercise which it plans to complete in Q1 2017.
DIRECTORATE CHANGE
Fastjet also announces that Colin Child, Non-Executive Chairman,
has resigned as Chairman and as a Director of the Company. Having
led the fund raising exercise in July this year Colin believes that
it would not be appropriate for him to continue in this role given
the Company is initiating, sooner than originally expected, a
further fund raising exercise.
Rob Burnham, Non-Executive Director, commented "Colin has
chaired the Board through a period of considerable organisational
change and demonstrated a total commitment to the success of the
Company which has been much appreciated by his colleagues."
Colin stated: "Although the trading and operational environment
has been challenging I have much enjoyed my time on the fastjet
Board. I leave the Board with an extremely good and experienced CEO
in place and I have every confidence that he will successfully
complete the Stabilisation Plan and pursue some exciting strategic
initiatives that will allow fastjet to deliver its full
potential."
Following Colin's resignation Nico Bezuidenhout, CEO, will
assume the role of Interim Chairman pending the appointment of a
new Non-Executive Chairman in due course.
Nico Bezuidenhout, Interim Chairman and CEO, commented:
"I sincerely thank Colin for his invaluable contribution to
fastjet and for the guidance he has provided to me personally.
Since my arrival in August, the Company has made substantial
progress in implementing the Stabilisation Plan and has, in the
process, resolved and attended to the key financial, contractual
and structural legacy matters that would otherwise have served to
impede the future performance of the Company. The journey has not
been a straightforward one but with our costs due to substantially
reduce in the New Year as various legacy and restructuring costs
come to an end, with our revenue generating initiatives beginning
to bear fruit and with various geographic and strategic expansion
opportunities being identified I am confident that, with the
necessary capital, the Company can break even by Q4 2017, and be
well-positioned to pursue sustainable growth and value-creation for
Shareholders going forward. Furthermore, based on my experience in
African Aviation, I am convinced of the tremendous market
opportunity there is for a truly pan African LCC."
For more information, contact:
fastjet Plc Tel: +44 (0) 20 3651
Nico Bezuidenhout, Interim 6307
Chairman and Chief Executive
Officer
Lisa Mitchell, Chief Financial
Officer
UK media - Citigate Dewe Rogerson Tel: +44 (0) 20 7638
Eleni Menikou 9571
Toby Moore
Nick Hayns
South African media - Tribeca Tel: +27 (0) 11 208
Public Relations 5500
Cian Mac Eochaidh
Kelly Webster
For investor enquiries please
contact:
Liberum Capital Limited - Tel: +44 (0) 20 3100
Nominated Adviser and Joint 2222
Broker
Clayton Bush
Christopher Britton
Jill Li
NOTES TO EDITORS
About fastjet Plc
fastjet Plc is the holding company of the low cost airline
fastjet which commenced flights under the fastjet brand in Tanzania
in November 2012. By adhering to international standards of safety,
quality, security and reliability; fastjet has brought a new flying
experience to the African market at unprecedented low prices.
Utilising a fleet of modern jet aircraft, fastjet has a long term
strategy to implement the low-cost carrier model across Africa to
become the continent's first low-cost, pan-Africa airline.
The results of the second quarter 2016 customer satisfaction
surveys showed that an average of 73% of customers were likely to
recommend fastjet to a friend. In developing its strong brand and
identity, fastjet has won and been nominated for a number of
awards, including Africa's Leading Low-Cost Airline 2016 at the
23rd World Travel Awards, winning three Transform awards for the
rebrand and launch of fastjet, the award for "Brand Strategy of the
Year" at 2014's Drum Marketing Awards in London, and the Transport
Innovator Award at the 8th Transport Africa Awards 2015 in
Johannesburg.
This announcement contains inside information for the purposes
of the Market Abuse Regulation.
fastjet Plc is quoted on the London Stock Exchange's AIM
Market.
For more information see www.fastjet.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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