HARARE -Low cost airline, fastjet, says it is to expand its African footprint following robust growth in Zimbabwe and Mozambique during the year ended December 31, 2018.
Expansion into Africa will consolidate the regional airline’s growing influence on the continent, where it has been growing connections and frequencies, taking advantage of the collapse of most State-run carriers.
fastjet saw its revenue rise 166 percent to US$38,3 million during the review period, from US$14,4 million during the comparable period in 2017, according to a trading update released this week.
The group attributes its growth to a 575 percent rise in passenger numbers Mozambique, and 45 percent surge in Zimbabwe, where load factors appeared to defy a volatile currency situation.
Ahead of year end, fastjet had rolled out its huge ambitions to network Africa with an investment in the South African headquartered chartering service provider, Federal Airlines in October 2018.
Chief executive officer (CEO) Nico Bezuidenhout this week said the acquisition had laid the groundwork for fastjet’s full entry into the South African market.
During the review period, fastjet executed “painful” corporate re-engineering processes to give the operation the right frame to face challenges in Africa, including a tricky situation in Zimbabwe where authorities have been failing to repatriate revenues due to foreign airlines now estimated at over US$100 million.
Zimbabwe presents an excellent opportunity for fastjet as the State-run Air Zimbabwe has gone bust and has been placed under administration.
“In 2018, we took significant and decisive action to right-size the group and ensure the business has a solid platform on which to build future growth,” Bezuidenhout said in a trading update released this week.
“Whilst these cost-cutting measures were at times painful, our newly-sized operations provide fastjet with a materially enhanced strategic position to pursue the growth opportunities on offer on the continent. The group concluded its investment in Federal Airlines in October 2018, providing a platform for entry into the South African market,” he said.
Federal Airlines is a private charter and shuttle airline.
It says over the last two decades; it has revolutionised the way passengers experience private air travel through professionalism and its seamless efficiency.
fastjet has entered the aircraft chartering market through Federal Airlines in South Africa
“fastjet’s business in Zimbabwe continued to grow during the first quarter of 2019, realising year-on-year revenue growth of 70 percent on the back of a 17 percent increase in output and a 71 percent increase in revenue per available seat kilometre,” the fastjet CEO said.
fastjet now accounts for 36 percent of flight departures between Harare in Zimbabwe and Johannesburg in South Africa, from 31 percent in the first quarter of 2018, it now accounts for 64 percent between Harare and Victoria Falls, from 49 percent previously.
“Despite the impact of cyclones in Mozambique at the start of the current year and continued fuel protests and currency volatility in Zimbabwe, fastjet is making progress and expects to generate a marginal underlying operating profit for 2019, with further route expansion planned for Zimbabwe in the second half of the coming year, as well as a brand entry into South Africa in 2020,” said the CEO.
“During December 2018, competition in the local Mozambique market intensified following the entry of Ethiopian Airlines as a domestic carrier,” Bezuidenhout said.
fastjet incurred an operating loss from continuing operations pf $41, 2 during the year to December 31, 2018, from a US$11,2 million loss on continuing operations the previous year.
The group’s divesture from its operations in Tanzania concluded in November 2018, resulting in the de-consolidation of US$27,2 million in revenue and US$15,8 million in after tax losses from the group’s continuing operations for the 2018 financial year;
Future aircraft lease obligations related to Tanzania were terminated.