African budget carrier Fastjet expects to move into the black this year despite widening 2018 losses.
The carrier, originally backed by easyJet founder Stelios Haji-Ioannou, reported an after tax loss of $27.6 million for 2018 against $11.2 million the previous year.
This came despite revenue growing by $24.1 million to $38.5 million helped by increased passengers numbers in Zimbabwe and Mozambique.
But costs rose by 132% to $64.1 million, largely driven by raised capacity in both countries.
The airline stopped loss-making operations in Tanzania in the period – taking a $14.6 million loss on the sale of three dedicated ATR-72 aircraft – and restructured its balance sheet in December.
A near break-even was reported for the first quarter of this year – the seasonally weakest three months. The carrier’s network includes the Victoria Falls (pictured) at the border between Zimbabwe and Zambia.
The performance enabled the carrier to expect an operating profit for the 2019 financial year, excluding foreign exchange losses, particularly in Zimbabwe.
“The directors continue to adopt the going concern basis, notwithstanding the expected need for further funding and assumed the ability to extract hard currency funds from Zimbabwe in the foreseeable future,” a statement said.
“Fastjet, with a restructured balance sheet and optimised organisational structure, a refined operating model and having diversified its geographic revenue streams over the past two years. is now better positioned to strategically deliver sustainable growth.”
CEO Nico Bezuidenhout said: “2018 saw the successful completion of the stabilisation process we embarked upon in 2016.
“It was a year during which substantial changes were implemented which will have long-lasting, structural benefits for Fastjet.
“Most notably, Fastjet withdrew from Tanzania – a market that had been consistently loss-making over a number of years – as well as completing its fleet transition, further reducing overhead costs, substantially reducing long-term debt, and replacing and enhancing our financial and management information core systems.
“2018 also saw a strong performance from Fastjet’s first full year of operations in Mozambique, the exercise of a purchase option that allows the group entry into the South African market through the acquisition of a shareholding in a profitable business in this country, and increased seat occupancy rates and revenue levels in our Zimbabwean business.
“The Fastjet of today is a fundamentally different business to that of 18 months ago, as evidenced by the group achieving operational profitability in two of its three markets for the last quarter of 2018.
“We remain focused on managing the macro-economic challenges confronting the business and on improving Fastjet’s performance still further.”