fastjet: 2017 performance in line with expectations, confident of positive cash flow in 2018

fastjet stated (05-Apr-2018) underlying trading for the year ended 31-Dec-2017 was broadly in line with expectations, with continued stable trading in Tanzania and strong performance in Zimbabwe. Early signs indicate a successful market entry in Mozambique. The carrier said its refleeting programme is resulting in significant improvement to load factor and revenue per seat. The airline handled 535,363 passengers at an average load factor of 71% in 2017, an improvement of more than 30% year-on-year. The carrier incurred exceptional cash costs of USD4 million in Dec-2017 due to an engine failure on an A319 aircraft. The engine event and a longer than anticipated start up period for Embraer 190 aircraft impacted revenues by approximately USD3 million. Chairman Rashid Wally commented: "Whilst 2017 presented some operational challenges for the group, it has been encouraging to see the rightsizing of fastjet's fleet beginning to yield positive results. The recent improvement in our trading performance in Zimbabwe and Tanzania combined with the successful launch of services in Mozambique gives us increased confidence in our growth strategy and the board is confident of achieving a positive cashflow from operations for 2018". Details of regional operations include:

• fastjet Tanzania: Remains "the leading airline in Tanzania" and stable trading continues. Efforts to better match capacity to demand are yielding benefits, notably a 23% year-on-year improvement in load factor to 76% in 1Q2018, accompanied by a 7% increase in the average fare per passenger. Revenue per available seat increased 29%, the second highest growth in the last 13 quarters. The airline plans to increase utilisation of its E190 fleet in Tanzania and announce new routes in the coming months, subject to regulatory approval;
• fastjet Zimbabwe: The political environment in Zimbabwe led to volatility in trading in the period leading up to the Presidential change in Nov-2017. Since this period, the airline reported "some of its strongest trading in the country since commencing operations". The carrier noted hard currency availability and its ability to repatriate funds from Zimbabwe remains challenged, adversely impacting the company's overall liquidity position. Group cash balance as of 28-Feb-2018 was USD10.3 million, of which USD6.4 million represented restricted cash in Zimbabwe;
• fastjet Mozambique: Commenced operations on 03-Nov-2017 and formed a strategic commercial partnership with LAM - Mozambique Airlines on 21-Mar-2018. Operations so far have been "highly successful" with load factor of 70% for Maputo-Nampula and Beira-Tete services. [more - original PR]