Shares in Sir Stelios Haji-Ioannou’s pan-African airline Fastjet have gone into a tailspin after it warned that revenues would be lower than expected both this year and next.
The airline blamed chaos resulting from the general election in Tanzania, its main hub for routes between African countries.
The democratic process has taken longer than usual amid allegations of vote-rigging and a refusal by the runner-up candidate to concede defeat.
Fastjet said on Tuesday this had led to “reduced governmental and civil service traffic and lower demand for travel more widely across the country”.
The airline said sales for 2015 and 2016 would be lower than anticipated due to the electoral delay, as well as tough market conditions and weakness in some African currencies.
The gloomy forecast, just a few months after it raised £50m to fund expansion plans, sent its shares down by around 7% in early trading.
But the business said it was still “well placed to capture the significant growth potential in the African aviation market”.
Fastjet, nearly 11% owned by easyJet tycoon Haji-Ioannou’s easyGroup, was set up with the aim of creating Africa’s first international low-cost airline.
Its blueprint was to set up hubs in key African airports to build a network that could offer relatively cheap travel in parts of the continent where road routes are long and in disrepair.
But it has taken longer than expected to establish hubs in places such as Zambia and Zimbabwe, as regulatory processes proved slow to operate.
Executives have also been distracted by complaints that directors were awarding themselves big pay packages despite the airline making losses.
Fastjet said it expects the final stage of its application to run a full-scale hub operation out of Zambia to be complete next year.
It has also secured a licence to have a hub in Harare, Zimbabwe, but is not expected to receive international approvals for new routes until the new year.
In the meantime the airline said it was “taking steps to manage its operating costs and overheads”.
