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Fastjet positioned to capitalise on sub-Saharan airline market, says Sanlam

Broker Sanlam picks out the positives after Africa-focused low cost carrier fastjet announced yesterday its debut first flight in Zimbabwe - its second base in Africa.

fastjet flew into Sanlam's sights today....

Broker Sanlam picks out the positives after Africa-focused low cost carrier fastjet (LON:FJET) announced yesterday its debut  first flight in Zimbabwe -  its second base in Africa.

The successful initial flight set-off from Harare and landed in Victoria Falls, before returning.

"..fastjet Zimbabwe will initially fly this route three times a week on Wednesdays, Fridays, and Sundays, with more flights being added as demand increases," noted the City broker, which repeated a 'buy' stance.

It also noted that FlyAfrica, a competitor in Zimbabwe, has been grounded after their licence had been surrendered due to boardroom problems.

"The reduction in competition, albeit only temporarily, is clearly positive for fastjet," said analyst Amisha Chohan.

In Tanzania, where the firm began operations in 2012, the analyst also highlights that its governing CCM party candidate yesterday John Magufuli won the presidential election with 58% of the vote, the electoral commission says.

"John is from same party that has ruled Tanzania for the longest ruling period. We view this as extremely encouraging for fastjet, as it will enable to carry on as usual," said Chohan.

The airline also announced yesterday that further routes to South Africa, Botswana and Malawi have been granted with designations to fly to Zambia, Democratic Republic of Congo, Kenya, Namibia and Mozambique expected in coming weeks.

Chohan noted the group’s 1H15 $70mln of net cash should fully fund its expansion plans.

"fastjet remains prime-positioned to capitalise on the undersupplied sub-Saharan African airline market, where the middle classes are growing and there is increased investment.

"We believe that further air service approvals in different countries will act as a share price catalyst."

fastjet shares are unchanged at 76.5p.

Quick facts: Fastjet PLC

Price: 0.155 GBX

Market: AIM
Market Cap: £5.89 m

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