Africa is seen as the last great mass travel destination yet to be developed.
President Obama called it ‘the continent on the move’ on a trip last year to the region and highlighted high GDP growth currently in many African states.
But it’s been a bumpy ride for Fastjet’s backers thus far.
And they have had to strap themselves in again after a warning that trading conditions have been tougher than expected in 2016.
As a results, trading numbers for the year will be materially below market forecasts said the company.
Another round of rationalisation is underway including reductions in capacity and the route network.
Fastjet also no longer expects to be cash flow positive for the year but it had US$20mln at the end of February, which it said will cover operational requirements.
Even so, Fastjet added it may raise more money to provide headroom and fund future growth as market conditions improve.
Major shareholder Sir Stelios Haji-ioannou has already expressed his concern and his investment vehicle easyGroup has called for changes to the board at the airline.
EasyGroup, which owns a 12% stake, has requested a general meeting to remove Fastjet's chief executive Ed Winter along with director Krista Bates.
Winter has already indicated he will step down after four years in charge but EasyGroup wants him to leave immediately.
What the brokers' say
Liberum said it expects expect fleet growth to pause this year, although capacity growth will remain strong reflecting the full year effect of the additional aircraft introduced into service at the end of 2015.
“We believe fleet growth should resume next year, subject to economic conditions, although the number of additional aircraft will also depend on regulatory approvals for new bases.
“Zambia remains on the to-do list, although it is unlikely to be an immediate priority.”
Liberum has been a long-term fan and remains one still.
“Recent setbacks do not invalidate the business model, in our view.
These setbacks should also not detract from the substantial progress made to date, in particular the establishment of a base in a second country under an additional air operator's certificate and the securing of international route rights, most notably to Kenya and South Africa.”
Low-cost airline penetration of the African market is low by global standards. No-frill carriers only account for about 10% of airline capacity compared with 20-40% in other regions.
At present Fastjet has bases in Tanzania and Zimbabwe and a fleet of six planes, though its ambitions eventually are for a fleet of 38.
Liberum now expects a loss in 2016 of US$19.7mln compared to a previous forecast of a small profit.