Fastjet incurs yet another major loss
Fastjet sadly lost approximately $81 million (nearly Sh130 billion) this past year. Experts claim that this could diminish the ambitions of this low cost carrier to turn into the most thriving airline of this type across the African continent.
The loss the previous year sums to USD31 million (approximately Sh210 billion) in only two years, making its profit books unable to balance with a huge $50 million back in 2012.
If it wasn’t for the Tanzania operation, the financial placement of the company could have been more challenging, in accordance with aviation specialists. They attribute the company’s troubles to issues like restriction to the size of the regional market, unhealthy competition as well as regulation hitches.
The Annual Report plus Financial Statements for that Year ended on 31st December, 2013 and they noted that In spite of the most recent hindrance, the company continues to be hopeful about making it huge in Africa as it looks for a grip in the unstable international travel trade. Although the group has sustained losses through the year, its directors are positive that the group can access enough finance to run as a ‘going concern’ for the near future and, in whatever case, for at least another year from the time of approval of the financial statements.
The trade expression “going concern” is used for a company which has the resources required to continue to function indefinitely. In case a company isn’t a going concern, it is then bankrupt.
Initially dealing as Rubicon Diversified Investments Plc, this group adopted a brand-new investing policy in the month of November 2011 focusing on the international aviation services industry with a target on Africa. Actually the company was listed on the Stock Exchange of London and then on the August was renamed as Fastjet Plc only three months prior to launching its very first flight.
Except for Tanzania, its home base, the firm’s other businesses in Africa have been a disappointment and a major source of financial setbacks. It has also done business in Kenya, Angola and Ghana.
Ms Jean Uku The commercial manager of FastJet Tanzania said that the loss of last year included “outstanding items valued at $32 million which are write-downs in the worth of Fly540” within Kenya. She informed us recently that the group’s working loss was USD47 million, and $22 million of it within Tanzania.
Ms Uku went on to say that the overall operating losses owing to Fastjet within Tanzania were USD27 million. She said that they anticipate the Tanzania operation to be financially rewarding by the close of 2014. To correct the financial problems, Fastjet is apparently broadening its network and running its resources harder so as to cover the head costs. The newest routes Johannesburg plus Lusaka are successful and are ready for more frequency since the LCC gears up to unveiling the Harare route with 2 flights the following month.
in addition, Plans are ongoing to raise the frequencies along the domestic Mwanza route up to 4 flights each day on Saturdays, Sundays, Fridays plus as well as Mondays.
In accordance with the audit report, the capacity has increased throughout the last months, with overall seats flown in the month of May increasing to 60,320 from the previous 54,230 in the month of April a raise of 11%. Every year, the seats increased by 68% and revenue increased by 81% in comparison to May 2013.