Low-coat African airline fastjet (LON:FJET) saw strong growth in passenger numbers in the first half of 2014 as it launched new international routes.
In its core Tanzanian operations, first half revenues shot up 96% year-on-year to US$19mln on the back of 41.5% increase in passenger numbers.
Average revenue per passenger on the Tanzanian routes grew 39.3% to US$81.65.
The company is still in the growth stage and has yet to achieve critical mass, as reflected in a first half loss before tax of US$34.5mln, versus a loss the year before of US$41.9mln.
The company has now disposed of, or suspended its three loss-making Fly540 businesses: Fly540 Kenya; Fly540 Angola; and Fly540 Ghana. However, Fly540 Ghana and Angola had a US$13.5 million adverse effect on the first half financial results of which US$6.4 million related to a foreign exchange revaluation adjustment of US dollar liabilities.
During the period under review, less than US$100,000 of fastjet Plc cash was used in legacy Fly540 operations.
Delays and a change in strategy have had an impact on the reported numbers for the period, the company said. The company had expected to be operational in Kenya by this time, but due to the delays in bringing Kenya online, focus was diverted to launching international flights to Uganda and Zimbabwe.
The financial outlook for the Tanzanian operation remains broadly in line with management’s previous long-term projections, but the company acknowledged that operations are not currently self-funding, and there will be a requirement for further funding for the group, especially to finance expansion plans.
Management remains convinced that its first mover advantage in bringing the low-cost model to Africa makes it an appealing investment for a variety of funds focusing on Africa, while larger airlines are expected to express an interest in code-sharing deals as fastjet expands.
Based upon strengthening performance in recent trading since the period end, the board remains confident in its strategy.
“Strong underlying traffic growth in the first half of 2014 continues to demonstrate that fastjet’s low-cost airline model works in the African market,” asserted Ed Winter, the chief executive of fastjet who is also filling in as chairman at the moment.
“This growth in traffic underpins our belief that people across Africa are increasingly embracing the travel opportunities offered by fastjet’s safe, reliable, and great value product, with a high percentage of first time flyers,” he added.
This report includes original source company information.
Source : http://centreforaviation.com/members/direct-news/fastjets-core-tanzanian-revenues-double-in-first-half-189391