African budget carrier fastjet reported a 2015 half-year net loss of $10.1 million, nearly halving the $20 million interim loss it posted in 2014. Fastjet warned its second half will be worse than originally forecast.
“As a result of slower than anticipated route development and the impact of weak African currencies, in particular the Tanzanian shilling against the US dollar, we now expect trading in the second half of 2015 to be materially behind management’s expectations. The board has not adjusted its forecasts for 2016,” fastjet interim chairman Clive Carver said in an update issued Sept. 28.
The Tanzanian shilling has deteriorated significantly against the US dollar since April 2015. Coupled with tightened government spending ahead of the country’s elections on Oct. 25, this has caused a “significant downturn” to fastjet Tanzania’s revenue per passenger.
The launches of two new fastjet airlines in Zimbabwe and Zambia have also been delayed, due to slower than expected clearances, meaning it has absorbed startup costs without the corresponding income, which will now be realized in 2016. “As a consequence, the board expects the above factors to result in a material increase in the loss expected for 2015,” fastjet CEO Ed Winter said.
For the six months ended June 30, fastjet’s revenue rose 65.8% to $31.5 million, while expenses increased 14.1% to $44.3 million. This produced an operating loss of $12.8 million, marking a 35.2% improvement on the prior half-year. These results exclude a $16.5 million exceptional gain from the sale of Fly540 Ghana, which reversed the net loss to deliver a $6.3 million group net profit.
Fastjet Tanzania—the only active airline within the group—posted a $9 million pre-tax loss, narrowed from a $13.9 million loss, as average revenue per passenger rose 7% to $86.61. Ancillary revenues doubled to hit $2.4 million.
Over the six-month period, fastjet Tanzania increased its average daily aircraft utilization from 6.4 to 9.7 block hours and carried 363,769 passengers, 56% more than in the comparable period, while maintaining a 70% load factor. This was based on a 56% capacity increase.
“Using the same assets as in the first half of 2014—three Airbus A319s—in the first half, through better utilization we increased the number of seats flown by 56%; total revenue increased by 66% and operating losses reduced by 26%—a great achievement,” Winter said.