"Rightsizing" measures and a significantly stronger balance sheet have prepared the foundations for improved overall performance through 2019 .
Based on the airline’s first quarter performance, Fastjet's board expects 2019 to be a marginally profitable year, albeit with several caveats.
The low-cost African airline, which has been under major restructuring following years of heavy losses, said it incurred an operating loss on continuing operations in 2018 of US$41.2mln versus a loss the year before of US$11.2mln.
The 2018 loss was heavier largely as a result of one-off impairments of US$23.9mln recognised against balances held on the balance sheet.
Group revenue from continuing operations rose to US$38.3mln in 2018 from US$14.4mln in 2017.
The first quarter of the year- traditionally a quiet one for the industry – saw the group record an underlying net operating loss of around US$200,000 on revenue of about US$9.5mln, compared to a loss of US$7.8mln on revenue of US$13.8mln in the corresponding quarter of 2018.
The performance in the first quarter was affected by cyclones Desmond and Idai, as well as by fuel protests and currency volatility in Zimbabwe.
Cash balances as at 31 March 2019, after the Zimbabwe triggered devaluation and exchange loss, amounted to US$2.9mln, of which $1.5mln is restricted inside Zimbabwe.
Excluding one-off foreign exchange losses caused by the Zimbabwean devaluation, the board expects the current financial year will see the group make a marginal underlying operating profit but it warned that the group’s ability to repatriate funds from Zimbabwe, and the volatility of the Zimbabwean currency, remain as material risks to the business.
“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 Nico Bezuidenhout, the chief executive of Fastjet.
Full Media Release and results here:
23 April 2019
("fastjet", the "Company" or the "Group)
fastjet, the low-cost African airline, today announces a trading update for the year ended 31 December 2018 and the first quarter of 2019.
Financial and Operational Highlights for 2018
· Group revenue from continuing operations increased by 166% to US$38.3m (FY2017: US$14.4m), driven by an increase in passenger numbers of 45% in Zimbabwe and 575% in Mozambique (as Mozambique only operated for two months in 2017) and an overall increase in yields of 33%;
· The Group concluded its investment in Federal Airlines in October 2018, providing a platform for entry into the South African Market;
· The Group incurred an operating loss for continuing operations for FY 2018 of $41.2m(1) (FY 2017 $11.2m loss on continuing operations); this result was however after one off exceptional items which arose from the capital raise performed in December 2018, which triggered one-off impairments of $23.9m against balances held in the Group balance sheet;
the loss excluding these exceptional items for FY 2018 is $17.3m (FY 2017 $ 11.2m loss);
· The Group's divesture from its operations in Tanzania concluded in November 2018, resulting in the de-consolidation of $27.2m in revenue and $15.8m in after tax losses from the Group's continuing operations for the 2018 financial year;
· Future aircraft lease obligations related to Tanzania were terminated, resulting in a saving of $25.1m on the E190s and $41.4m on the ATR72's being removed from the Group's future obligations;
· The Group's Balance Sheet was restructured in December 2018, resulting in a reduction of 89% in long-term interest-bearing loans and the addition of four ERJ 145 aircraft valued at $11.5m as fully-paid assets to the Group's Balance Sheet;