Fastjet, the low-cost African airline, has warned that it will go bust unless it can raise more money or reach an agreement with key creditors in the coming days.
It is the latest in a series of warnings from the airline, which was set up in 2012 with the backing of easyJet’s founder, Sir Stelios Haji-Ioannou.
The company has been talking with shareholders and creditors for months and warned in late September it would need more funds by the end of October to continue operating.
However, it said on Wednesday that it is able to keep operating into November due to “some improvement in trading and cash generation”, giving it more time to hammer out a deal with investors and lenders.
Fastjet said: “Whilst discussions to date with certain shareholders and creditors have been positive, discussions are ongoing and there can be no guarantee of a successful outcome. If the company is unable to carry out an equity fundraise and/or reach an agreement with its key creditors in the coming days, the group would be unable to continue trading as a going concern.”
As of 24 October, the group had cash of $3.4m (£2.7m), of which $2.7m is locked up in Zimbabwe.
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 1m 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.
