FastJet Targets Southern Africa as Tanzanian Routes Show Promise

FastJet Plc (FJET), seeking to become the first pan-African discount airline, said it’s ready to extend a network currently limited to the Tanzanian domestic market into South Africa, Zambia and Malawi in coming months.

FastJet had an operating loss of $39 million in the first half, with the Tanzanian operation trimming its shortfall to $4.2 million in the second quarter, the London-based company said in a statement today. Net cash fell to $4.4 million before the airline raised $9.3 million through a share sale.

“We are moving ahead with our growth plans,” said Chief Executive Officer Ed Winter, who will add a fifth Tanzanian city, Mbeye, to the timetable from Nov. 1. “As our planned network expansion progresses and scale covers fixed operating costs, we fully expect FastJet Tanzania to become profitable.”

FastJet’s first international service, to Johannesburg from Dar es Salam, Tanzania’s biggest city, will commence once local approvals have been received, followed by routes to Zambia and Malawi, it said. Flights could also be added from South Africa to “underserved and overpriced” sub-Saharan locations.

Shares of FastJet shares traded 3.8 percent lower at 5.75 pence as of 8:29 a.m. in London. They’ve slumped 85 percent this year, valuing the airline at 22 million pounds ($36 million).

FastJet is continuing talks with potential partners to establish its brand in Nigeria via a licensing deal to overcome regulatory hurdles, it said. Such an arrangement could be used elsewhere, though growth in South Africa and other major markets such as Kenya will be pursued through direct investments.

The group’s Fly540 operations, which use ATR turbo-propeller aircraft, are not expected to make a profit in the short term, prompting a series of write downs on goodwill and investments totaling $14.4 million in the first six months. It’s trying to reduce its stake in Fly540 Angola while maintaining the option of expanding FastJet operations there.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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