Fastjet PLC (LON:FJET) shares fell over 5% on Wednesday after a slightly cautious trading update from the African low-cost airline group led City broker Liberum Capital to cut its price target for the stock to 22p from 25p.
The AIM-listed firm also announced its intention to exercise its option to purchase three ATR 72-600 (ATR) turbo-prop aircraft and the entering into of a US$12mln loan agreement with Solenta Aviation Holdings Limited.
In its update, the discount airline group said: "Whilst the delays introducing the new aircraft onto our routes have been frustrating, it has been pleasing to see the positive impact of right sizing our fleet on both load factors and prices."
Rashid Wally, fastjet's chairman, commented: "Whilst 2017 presented some operational challenges for the group, it has been encouraging to see the rightsizing of fastjet's fleet beginning to yield positive results.
"The recent improvement in our trading performance in Zimbabwe and Tanzania combined with the successful launch of services in Mozambique gives us increased confidence in our growth strategy and the Board is confident of achieving a positive cashflow from operations for 2018."
In a note to clients, analysts at Liberum said: “Our recommendations remain ‘buy’, but we reduce our price target due to our earnings forecast cuts, higher debt after the ATR purchase and the weakening of the US dollar."
In early afternoon trading, fastjet shares were 5.6% lower at 16.9p.