RUCCI
JF-Expert Member
- Oct 6, 2011
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-Commodity prices, currency rates weighing on revenue
- Carrier delays opening of routes from Zambia, Zimbabwe
FastJet Plc, seeking to become the first discount airline with a network spanning sub-Saharan Africa, predicted a wider full-year loss and reined in expansion plans as an economic slowdown linked to falling commodity prices weighs on revenue.
FastJet shares fell as much as 6.7 percent Monday after the London-based carrier said there'd be a "material increase" in its full-year loss amid a weakening of the Tanzanian shilling and Zambian kwacha versus the U.S. dollar, in which it reports earnings, buys fuel and rents planes.
Revenue per passenger is also falling in real terms as Tanzania cuts public spending ahead of October elections, FastJet said. The introduction of international routes from Zimbabwe and Zambia will be delayed to mid-November and early December, pushing revenue gains into 2016, it said.
"African currencies have lost considerable value against the U.S. dollar, which, combined with a worldwide reduction in commodity prices, has caused an economic downturn in both Tanzania and Zambia," Chief Executive Officer Ed Winter said in the release. The shilling has weakened 25 percent against the dollar this year and the kwacha by 72.4 percent.
Bigger Fleet
Winter added that he's "confident" of meeting forecasts for 2016, when house broker Liberum Capital estimates the company will post a pretax profit of $10.7 million. Liberum now estimates 2015 losses at $31.1 million, compared with $19.5 million previously.
FastJet shares fell as much as 6 pence to 84 pence and were trading 4.4 percent lower at 86 pence as of 10:45 a.m in London, paring gains this year to 23 percent and valuing the company -- which began flying in November 2012 -- at 57 million pounds ($87 million).
Operating losses in the first half decreased by 26 percent to $12.8 million and passenger numbers surged 56 percent to almost 364,000 from a year earlier, even with the same three Airbus Group SE A319 jets. The fleet size has since increased to six planes, including the first owned example.
Source: FastJet Predicts Bigger 2015 Loss as African Economies Stutter
- Carrier delays opening of routes from Zambia, Zimbabwe
FastJet Plc, seeking to become the first discount airline with a network spanning sub-Saharan Africa, predicted a wider full-year loss and reined in expansion plans as an economic slowdown linked to falling commodity prices weighs on revenue.
FastJet shares fell as much as 6.7 percent Monday after the London-based carrier said there'd be a "material increase" in its full-year loss amid a weakening of the Tanzanian shilling and Zambian kwacha versus the U.S. dollar, in which it reports earnings, buys fuel and rents planes.
Revenue per passenger is also falling in real terms as Tanzania cuts public spending ahead of October elections, FastJet said. The introduction of international routes from Zimbabwe and Zambia will be delayed to mid-November and early December, pushing revenue gains into 2016, it said.
"African currencies have lost considerable value against the U.S. dollar, which, combined with a worldwide reduction in commodity prices, has caused an economic downturn in both Tanzania and Zambia," Chief Executive Officer Ed Winter said in the release. The shilling has weakened 25 percent against the dollar this year and the kwacha by 72.4 percent.
Bigger Fleet
Winter added that he's "confident" of meeting forecasts for 2016, when house broker Liberum Capital estimates the company will post a pretax profit of $10.7 million. Liberum now estimates 2015 losses at $31.1 million, compared with $19.5 million previously.
FastJet shares fell as much as 6 pence to 84 pence and were trading 4.4 percent lower at 86 pence as of 10:45 a.m in London, paring gains this year to 23 percent and valuing the company -- which began flying in November 2012 -- at 57 million pounds ($87 million).
Operating losses in the first half decreased by 26 percent to $12.8 million and passenger numbers surged 56 percent to almost 364,000 from a year earlier, even with the same three Airbus Group SE A319 jets. The fleet size has since increased to six planes, including the first owned example.
Source: FastJet Predicts Bigger 2015 Loss as African Economies Stutter