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Fastjet PLC has taken the decision to cease funding Fastjet Airlines Limited, its subsidiary in Tanzania, a move that could see the airline’s operations in Tanzania cease.
When reporting its interim results for the six months ending June 2018, fastjet said: “Recent changes in the competitive landscape in Tanzania have caused the Board to evaluate fastjet’s Tanzanian operations and the consequential financial impact of continued losses in this operation, which could include ceasing operations in country.”
In the statement, fastjet PLC also warned that it needed additional funding by the end of October to enable it to continue operating.
However, fastjet CEO, Nico Bezuidenhout, quickly reassured the market that he was confident funds would be raised. “Having ring-fenced the funding obligation as far as Tanzania is concerned, the fastjet business is potentially in a better position than it has ever been before.” He added that the company had two very strong growth markets in its Zimbabwe and Mozambique subsidiaries.
In an interview shortly after the results were released, Bezuidenhout was less confident with the outlook in Tanzania. Asked if the company could pull out of Tanzania, he said it was up to the local board and local entity to evaluate alternative sources of funding. “From our perspective, there are alternative growth markets available on the continent and, in the short term, we see a better use of funding.
“Ultimately it would be a pity to pull the brand out of the market, given the fact that it is the biggest aviation brand in Tanzania.” He said historically, under a better competitive environment, the business had generated substantial monthly revenue.
While not naming the national carrier outright, he made reference to the airline’s placement of a Boeing 787 on a one-hour flight sector, adding 280 seats. “We have seen that fares over the last two months have come down quite drastically.”
Source: tourismupdate.co.za