Fastjet shares down 6% on new warning

fastjet

Fastjet, the budget African airline, has warned that it could collapse unless investors provide money by the end of the month.

The airline issued a warning in October saying that it was close to collapse unless an injection of cash was provided soon.

In a statement, the Fastjet said: “The company continues to review its current cash requirements and is able to continue operating during November due to some improvement in trading, cash generation and internal efficiencies.”

“The headroom available allows the company further time to continue discussions with its major shareholders and creditors,” it added.

“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, the group would be unable to continue trading as a going concern.”

Following the news, shares in the group fell 6%.

The budget airline was founded by easyJet (LON:EZJ) founder, Sir Stelios Haji-Ioannou.

The group has a cash balance of $3.9 million (£3 million), however, £3 million of this is held inside Zimbabwe and has restricted access.

Shares plummeted 70% in June on a previous financial warning after saying it was “at risk of not being able to continue trading as a going concern”.

The airline was first launched in Tanzania in 2012 but has expanded over South Africa, Zimbabwe, Zambia, Mozambique, Uganda, Malawi and Kenya.

Shares are currently down 4.11% at 1.68 (1259GMT).

 

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Safiya focuses on business and political stories for UK Investor Magazine. Her interests include international development, travel and politics.