African low-cost airline Fastjet today issued a profits warning.
The carrier admitted that “challenging market conditions affecting much of the African aviation industry have been a lot more prolonged than management originally forecast”.
Fastjet revealed that action has been taken to manage its operating costs and overheads.
Further measures are being implemented, including reducing capacity and rationalising the route network to align it with current demand, Fastjet said in a trading update.
“Based on current management forecasts, the board expects results for 2016 to be materially below market expectations and the group no longer expects to be cash flow positive for the year,” the airline said.
With more than $20 million of cash available at the end of February 2016, and based on current forecasts, the airline has sufficient funds to meet its operational requirements.
“The board may consider raising further funds during the year to provide additional headroom and ensure the company has the necessary resources to fund future growth as market conditions improve, the statement added.
“The company remains confident in its low-cost airline model and is well positioned to capture the significant growth potential of the developing African aviation market.”
The disclosure came a week after 12% shareholder Sir Stelios Haji-Ioannou called for the removal Fastjet chief executive Ed Winter and another senior director, saving he had “lost faith” in the management of the airline.
The easyJet founder warned that “unless the board does some serious cost cutting the company will soon run out of cash”.