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Fastjet says South Africa prime focus in coming months

Fastjet says South Africa prime focus in coming months

African no-frills airline Fastjet (LON:FJET) is to encourage greater local investment in its operating subsidiaries to try to overcome delays in getting its network established.

The airline said obtaining the rights to these routes where Fastjet wishes to fly had taken much longer than expected due to bureaucracy and protectionism.

“The strategy is therefore to create a series of airlines, all operating under the Fastjet brand, and meeting identical international standards of reliability, safety and customer service,” Fastjet said in a stock exchange statement.

“The flights for these airlines will all be sold on one website as a single brand, providing the consumer with a pan-African airline experience, and the airlines with a reputation and sales platform across the continent.”

Fastjet, which was spun out of Lonrho and backed by easyJet founder Sir Stelios Haji-Ioannou, intended to use Lonrho’s Fly540 network as the hub for a Pan-African discount airline.

Chief executive Ed Winter however said the Fly540 businesses acquired from Lonrho had all seriously underperformed relative to expectations with an underlying loss (EBITDA) from the continued Fly540 operations of US$17.8mln in the 18 months to December 2012.

Fastjet also took a raft of write-downs for Fly540 businesses in the figures and alongside other charges the pre-tax loss was US$55.3mln.

Because of the losses, cash outflow and also the lack of certainty over access to international routes, auditor KPMG qualified the figures though the directors said it has enough funding to continue operating for at least a year.

The airline recently signed a memorandum of understanding with Blockbuster, a South African investment company, to set up to operate a service between Johannesburg and Cape Town.

“South Africa is going to be one of the prime focus areas for Fastjet over the coming period, whilst we review and continue to restructure some of the smaller operations we have elsewhere in Africa,” Winter said.

“Discussions are also on going in a number of other African countries with a view to launching airlines under the Fastjet brand.”

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