African budget carrier Fastjet, backed by easyJet founder Sir Stelios Haji-Ioannou, warned that it would have to raise more money to keep flying as it suffered a first-half loss of $41.9 million.
The carrier was valued at $86 million when it was created in June last year after Africa-focused conglomerate Lonhro spun off its loss-making Fly540 operation.
Despite raising a further $47 million since then, Fastjet is now worth just £22.3 million and its accounts carried the warning that it would need to raise fresh cash before it could be considered self-financing, the Daily Telegraph reported.
It said the directors had “a reasonable expectation that the group has access to sufficient finance to continue as a going concern for the foreseeable future although they acknowledge that further funds will need to be raised in the future which represents a material uncertainty over going concern”.
Chief executive Ed Winter said that despite the funding issues the company had made “good progress” – especially its core Tanzanian business.
He attributed most of the losses to the inherited Fly540 operation – written down by a further $14.5 million over the period – which he said had “not performed as expected”.
He said: “At an underlying route level the Tanzanian business is profitable,” noting how its operations across three domestic routes achieved $81 of revenue per passenger in June – almost double January’s $46. First quarter losses of $9.1 million at the Tanzanian business were cut to $4.2 million in the second quarter.
“We are bringing the low-cost model into Africa. Passengers used to just turn up on the day they wanted to fly and buy their ticket if a plane was there. In a short space of time people are learning that if they book early, they get a cheap flight and the plane will be there.”
He said he expected Fastjet’s first international flight between Dar es Salaam and Johannesburg, which was due to operate last Friday but was cancelled at the last moment, to start by the middle of this month.