The low-cost African airline Fastjet says it must come to an agreement with its creditors ‘within days’ or it will be forced to cease operations.
Late last month Fastjet warned that it might be forced to cease trading by the end of October but said that immediate crisis has passed but it remains in discussion with its shareholders and creditors in order to find a way forward.
Fastjet was only saved from going to the wall in September and the latest news will be another blow to its shareholders.
A statement from Fastjet which used to run flights between Nairobi and Tanzania said “the company has been negotiating with key creditors to reduce outstanding balances due to be paid and reduce the burden of interest and capital repayments. This process remains ongoing.
“While discussions to date with certain shareholders and creditors have been positive, discussions are ongoing and there can be no guarantee of a successful outcome. If the company is unable to carry out an equity fundraise and/or reach an agreement with its key creditors in the coming days, the group would be unable to continue trading as a going concern.”
The group is now believed to have cash reserves of only $3.4m (£2.7m, Sh340m) and the company’s shares have again plummeted on the stock exchange.
In an update issued to the stock exchange on October 31 morning, Fastjet said it would be able to continue operating beyond the end of October “due to some improvement in trading and cash generation”. The Tanzania-based airline now operates out of three bases flying to 13 destinations in Tanzania, Zambia, Mozambique, Zimbabwe and South Africa.
One of its co-founders was the Easyjet European low-cost airline tycoon Sir Stelios Haji-Ioannou who has previously criticised the way the company was run.
It is operating at a loss of around $15 million (Sh1.5 billion) a year although revenue is up to $ 30 million. (Sh3 billion). Fastjet’s website was still taking bookings for future flights as of yesterday.