LONDON – Struggling budget airline FastJet has warned that it is at risk of going bust unless emergency talks with shareholders result in fresh funding.

FastJet warned that it has a cash balance of just US$3.3 million, of which US$1.75 million is restricted cash in Zimbabwe.

The loss-making airline, which offers budget flights across a number of African countries, including Zimbabwe, said it is in “active discussions” with major shareholders regarding a potential equity fundraising.

However, in the same breath, it added that, in the absence of fresh cash, “the group is at risk of not being able to continue trading as a going concern”.

FastJet added: “Whilst initial discussions with certain shareholders have been positive, discussions are ongoing and there can be no guarantee of a successful outcome.
“It is expected that any equity fundraise will be concluded in conjunction with the announcement of the company’s annual results for the year ended 31 December 2017.”
The group said if the fundraising is not successful, it will result in FastJet being suspended from trading.
Over the past two years FastJet has been reducing costs as part of a stabilisation plan.
Several European budget airlines have collapsed in recent weeks, including Cypriot carrier Cobalt and Denmark’s Primera Air. The aviation industry is struggling with rising fuel costs, overcapacity and falling consumer demand.
Fastjet launched in Tanzania and expanded into South Africa, Zimbabwe, Zambia, Mozambique, Uganda, Malawi and Kenya, with the goal of becoming a pan-African budget carrier. But it has run up losses, struggling with the continent’s banking infrastructure, overambitious plane orders and office costs. It has never carried more than one million passengers a year.
Haji-Ioannou, who owned the Fastjet brand until last year, fell out with the company’s management two years ago and forced the firm to dismiss its chief executive, Ed Winter. Shares in the group slumped 25% to 1.75p.