Low-cost carrier Fastjet is to set up a base in Zimbabwe as it seeks to bring its business back to profitability amid turbulent times for its Tanzania operations.
“For Zimbabwe, we have been issued with the Air Operator Certificate (AOC); the AOC for Zambia process is ongoing,” said Jimmy Kibati, Fastjet general manager for East Africa.
This expansion is particularly important in laying the foundations for profitable growth in 2016, officials said.
The London Stock Exchange-listed carrier last month issued a profit warning, citing the depreciating currency in Tanzania coupled with tightened government spending ahead of the country’s elections on October 25.
The Tanzanian shilling has deteriorated significantly against the US dollar since April 2015 to hit Tsh2,164 last week, losing a fifth of its value since January.
“In addition, the start of operations in Zambia and Zimbabwe has been delayed into Q4. Accordingly the board has downgraded its forecast for full year 2015 but is confident of meeting its expectations for 2016,”said Fastjet chief executive Ed Winter in a press release.
Despite the tough conditions, the low-cost carrier’s revenues in 2014 jumped to $31.5 million from $19 million a year earlier, boosted by a 56 per cent rise in passengers.
Losses before tax narrowed to $9.9 million from $20 million in 2014. Flights to Johannesburg in South Africa have now increased from three times a week to daily, Harare and Lusaka from four times to daily, and a new route to Lilongwe was introduced in July.
Analysts however said the delays in the airline’s expansion plans affects its income.
“This implies that the 2015 results will have no additional income from these operations while the airline will have spent money for setting up the base and on the purchase of aircraft,” said Eric Musau, a senior research analyst at Standard Investment Bank Ltd.
