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Fastjet has only enough cash to fly for one week

By Reuters | December 8th 2018 at 11:20:15 GMT +0300

The airline, which had a cash balance of Sh696.1 million ($6.8 million) as of Thursday, said it might have to formally hire insolvency advisers for the process of administration. [Photo: Courtesy]

Troubled low-cost African carrier Fastjet Plc warned on Friday it may have to go into administration, shut shop or sell itself as it had only enough cash to keep it in business for another seven days.

The airline, which had a cash balance of $6.8 million as of Thursday, said it might have to formally hire insolvency advisers for the process if its cash balance does not improve.

Fastjet, launched in 2012 and modelled on the likes of no-frills airlines easyJet Plc and Ryanair Holdings Plc, has been cash-strapped for more than two years due to tough conditions in its home market, Tanzania.

The airline, which operates in Tanzania, Zambia, Zimbabwe, Mozambique and South Africa, warned at the end of September that it needed to boost its finances within days to survive.

The airline had planned for additional funds and equity refinancing in November to raise its capital base by at least $40 million.

Fastjet said on Friday that discussions with stakeholders so far had been positive, but there was no guarantee of a successful outcome.

It also said it had conditionally raised about 550,000 pounds via an open offer of 55.17 million shares.

Fastjet’s shareholders include activist M&G Investment, Janus Henderson and South African carrier Solenta. It was founded by Stelios Haji-Ioannou, the son of a shipping magnate.

Fastjet, whose first flights transported passengers from Dar es Salaam to two domestic destinations - Kilimanjaro and Mwanza, said that $6.4 million of its cash balance of $6.8 million was restricted cash held inside Zimbabwe.

Fastjet’s shares, which have slumped almost 89 percent this year, were 4.92 percent lower at 1.6 pence at 1411 GMT.

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