South Africa to get a new low-cost airline

Fastjet will begin flying from Mozambique this year and expects to commence internal South African services in 2018 as it rekindles growth plans put on hold as losses mounted.

With the operating loss down 57% in the first half and break even forecast for the fourth quarter, Fastjet is ready to revive its pan-African ambitions, aided by a $44 million fundraising, about one-third of which will come from shareholder Solenta Aviation Holdings, it said Friday.

“The engine is starting to fire on more cylinders,” chief executive officer Nico Bezuidenhout said by phone from Johannesburg, where the company moved its base from the UK this year in order to cut costs and be closer to key markets.

Operations in Mozambique should start in the next few months using one of three 50-seat Embraer SA ERJ145 jets that Fastjet has leased.

The carrier has meanwhile struck a branding deal with South Africa’s Fedair, which is owned by Solenta, that will boost its presence in the continent’s largest economy and pave the way for the start of its own flights there some time in 2018, according to Bezuidenhout.

Fastjet traded up 1.2% in London, extending gains this year to 31%. The stock has lost ground or barely advanced every trading year since the carrier was founded in 2012.

Under the new CEO, hired last year from the low-cost Mango arm of South African Airways, Fastjet has offloaded a fleet of six Airbus SE A319s with 145 to 156 seats and switched to smaller regional jets better matched to demand.

The last A319, based in Tanzania, will leave in December, to be replaced by two 108-seat Embraer E190s, with the two other ERJ145s based in Zimbabwe.

Fastjet has also agreed to lease three Avions de Transport Regional ATR 72 turboprops, one of which may be used to commence its own South African services.

The 70-seat aircraft would also be well suited to serving Mozambique or for flights between secondary cities in Tanzania, Bezuidenhout said.

The carrier already connects Johannesburg with Zimbabwe, offering four flights a day from the capital, Harare. That’s lured more business passengers and helped lift unit revenue across the group by 33% in the first half.

Fastjet, which has yet to post an annual profit, has been trading in the black in Tanzania for three or four months and showed a profit in Zimbabwe in August, putting it on course to end losses overall next quarter, the CEO said.

Fastjet will consider a stock listing in addition to London’s Alternative Investment Market next year, with Johannesburg’s AltX exchange favored, Bezuidenhout said.

Nigeria is also an option, though exposure there would be best tied to the launch of flights in West Africa, something not planned before 2020. Gabon, where Solenta has an offshoot, is one possible location for a hub.

Read: Budget airline raises $75 million for SA expansion

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South Africa to get a new low-cost airline