The future of African air travel
​fastjet is a low-cost carrier (LCC) that launched in Tanzania on 29th November 2012. It operates a single type fleet of modern, fuel efficient, jets on a short haul, point to point network that currently involves servicing 9 routes to 9 destinations in 6 African countries. A great opportunity lies in the fact that Africa possesses 15% of the world's population and 20% of its land mass, yet generates only 3% of global air-travel. Fastjet is making visible progress to address that and since launch has now flown more than 1.5m passengers, indeed 364k of these were in H1 2015 (+56% year-on-year). To meet demand new aircraft are now coming on stream with the 4th A319 entering service in September, a 5th arrived in Harare (Zimbabwe) on 18 September and a 6th (the 1st to be owned) was purchased for cash on 25 September 2015 at a "discount" to its $15.5m list price. This increases capacity from approximately 28,000 seats/week in Jan'15 to a forecast 50,000 by Dec'15. So as to finance this rapid expansion, the Board announced a £50 million placing (£47.7m net) on 1st April 2015 - representing 75.3% of the enlarged equity base - at 100p per share (post 100-1 consolidation). Continuing to take a longer term view of fastjets' potential and calculating value on DCF basis, we arrive at a target price of 262p/share, materially above current levels.
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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