fastjet: Cashflow breakeven seen in Q4'17
fastjet was launched in Tanzania in Nov 2012, and is currently in the process of being right-sized and turned-around by industry veteran CEO Nico Bezuidenhout (appointed Aug’16).After nearly 12 months of radical surgery we now feel sufficiently confident to reinstate our valuation - pitched at 24p/share, based on a blend of 2021 multiples and discounted back at 15%.
Drivers are: improved revenue visibility, a dramatic realignment of costs, faith in the management team and perhaps most importantly, the airline seems to be on track to reach cashflow breakeven in Q4’17. Albeit, this is seasonally the busiest time of year for passenger numbers.
Specifically, this morning in a trading statement ahead of the AGM, the company said that its stabilisation plan was working. Encouragingly too, with the backing of 28.5% holder and strategic investor, Solenta Aviation, the Board are also “evaluating expansion options to further geographiesâ€.
Furthermore, in recognition of what has been achieved in such a short space of time, fastjet was awarded the prestigious Skytrax prize of Best Low Cost Carrier in Africa at the recent Paris Airshow. Last, but certainly not least, the business has agreed to buy 100% ownership of its name from easyGroup Holdings for $2.5m in cash.
So, with the foundations now in place to build a highly profitable and rapidly expanding business, fastjet looks well positioned to enjoy the fruits of its labours, alongside greater demand from African corporates, consumers and tourists, who are increasingly opting to travel.
Fastjet is a pan-African low cost airline. Co. operates domestic and international routes in all economically viable African markets. As of Dec 31 2016, Co. had three aircraft, two Airbus A319s in Tanzania and one Solenta Embraer E145 in Zimbabwe. As of Dec 31 2016, Co. held two Air Operator Certificates in Tanzania and Zimbabwe and operated six routes.
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