Fastjet flags going concern doubt again as restructuring plan in jeopardy

(Reuters) – Fastjet Plc on Monday warned again that it would not be able to continue as a going concern if the South African low-cost carrier could not carry out its restructuring proposal by the end of March due to a shortage of funds.

The company, which lost its turnaround specialist Chief Executive Officer Nico Bezuidenhout last year, is struggling to get funding for a restructuring of its business as talks with an investor consortium led by its biggest shareholder Solenta Aviation to sell its Zimbabwean operations are not yet finished.

Back in November, Fastjet said it was in discussions to sell the operations for $8 million, a deal which could help the South African low-cost carrier stay alive until 2021.

Meanwhile, the proposal to restructure is aimed at becoming a capital light business operating as a franchise house that would earn revenue through the Fastjet brand and provide airline management solutions, while also continuing to hold its investment in the FedAir business.

The consortium is finalising its due diligence on Fastjet Zimbabwe and securing the required regulatory approvals, the company said.

Fastjet projects that it will have sufficient resources to meet its operational needs until the end of March, with cash reserves of only $3 million at Jan. 23.

Fastjet, which has operations in Zimbabwe and South Africa, said it was trading in line with management’s expectations through the year-end including the peak holiday season, with revenue expected to be $42 million.

Loss after tax for the year ended Dec. 31 was expected to shrink to $7 million to $8 million from a loss of $65 million a year earlier.

Reporting by Yadarisa Shabong in Bengaluru; Editing by Bernard Orr

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