fastjet gaining in Tanzania but contracting in scope

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By TESTCustomwebLP TESTCustomwebLP September 30, 2014 20:42

fastjet gaining in Tanzania but contracting in scope

Although fastjet’s six month interim results to the end of June 2014 show impressive growth for its Tanzania business, they also shows increased losses that have sent shares tumbling.

Fastjet Tanzania first-half revenues grew 96% to $19.0m, with a 41.5% increase in passenger numbers with average revenue per passenger for the period up 39.3% to $81.65. Even so, red ink flowed for the period with an underlying EBIT loss of $30.5m, including US$13.9m trading loss for the Tanzanian operation. Fastjet Tanzania aircraft utilisation increased from 5.5 hours to 7.9 hours per aircraft per day during the period and reached 9.9 hours per aircraft per day by the end of August, on track to achieve the set target of 11.5 hours. On time average was 90%.

Fly540 Ghana and Angola ended the period $13.5m in the red of which $6.4m related to a foreign exchange revaluation adjustment of US Dollar liabilities, and during the period under review, less than $100,000 of fastjet Plc cash was utilised in legacy Fly540 operations. These operations have been suspended as restructuring takes place
Fastjet is trying to create ancillary revenue streams at this time, flowing car rentals, hotel bookings and car parking through its website and this revenue is yet to make an impact on the books.

On the interim figures, shares fell nearly 12%, or 0.18p, to 1.3p. Fastjet has taken action to stem Fly540 losses, but this has at the same time left the company somewhat limited in scope from what was originally envisaged by investors some years ago. However given the rate of growth one might think that Fastjet now presented extraordinary value and as such is a good investment for the brave.

Flydubai and Jambojet present significant headwinds to Fastjet dominance and the inability to breakout and connect passengers beyond Africa in the near future is a significant worry for many. Also it should be noted that Chinese visitor numbers to Eastern Africa have fallen off of a cliff of late since the Ebola outbreak. Add to this the fall away in European tourists due to terrorist action, Ebola and of course the European recession and you do have a rather toxic headwind to growth. Thus all things taken into consideration Fastjet is seemingly doing well at this time but figures for this current quarter would make most interesting reading and would shed further light on if the airline is able to deliver on ancillary revenue streams in the near term, if they can and the business plan is working then this is one airline that will go far when things settle and the region bounces back.

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By TESTCustomwebLP TESTCustomwebLP September 30, 2014 20:42