Low cost carrier (LCC), Fastjet, wants to sell a 51% stake of Fastjet Tanzania to local investors writes LEONARD MAGOMBA.
In London, where the parent company is listed, market watchers say the move is logical. Research house, Equity Development. said in a background briefing last week, the move will unlock substantial value and reinforces the group’s low cost model in Africa.
The transaction will be done by placing new shares to local investors to take the proportion of shares they hold in Fastjet Tanzania to a majority 51%. Fastjet aims to deliver the same service as its European low-cost counterparts to the African continent. The airline was initially created with the acquisition of Fly540, an airline operating in East Africa.
Fastjet is planning to accelerate expansion over the next 18 months with several new international routes from its original base in Tanzania and the launch of three new affiliates. The expansion is risky and ambitious but is necessary as the group currently lacks the scale to be sustainable.
According to other analysts Fastjet has not added a single aircraft in 18 months – an unusually long time for an LCC start-up. The group now plans to expand its fleet from three to 13 A319s by the end of 2015.
Further growth is expected in 2016 and 2017 to a total of 24 aircraft as planned new affiliates in Zambia, Kenya and South Africa expand. Fastjet could quickly become Africa’s largest LCC brand but will have to overcome multiple challenges, including potential regulatory hurdles, which have so far stalled its progress.
Recently, the LCC received an Air Service Permit (ASP) from Zambia’s Civil Aviation Authority and the Ministry of Transport and is continuing to work toward its Air Operators Certificate (AOC). This will allow the start of scheduled operations.
“We have been working tirelessly to roll out the fastjet model across the region and obtaining the ASP in Zambia is a really positive step forward. We still have to obtain the full AOC, but this vote of confidence from the authorities is a major step along that road,” continuing: “Timescales before the first flight will be dependent on the time taken for the authorities to review the AOC application documents. We look forward to going on sale and commencing operations in Zambia once that process has been completed,” Fastjet CEO Ed Winter said last week.