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Fastjet expecting to squeeze out small underlying profit this year

"Rightsizing" measures and a significantly stronger balance sheet have prepared the foundations for improved overall performance through 2019

Fastjet aircraft
The group completed the disposal of its operations in Tanzania in November 2018

Based on the airline’s first quarter performance, Fastjet PLC's (LON:FJET) board expects 2019 to be a marginally profitable year, albeit with several caveats.

The low-cost African airline, which has been under major restructuring following years of heavy losses, said it incurred an operating loss on continuing operations in 2018 of US$41.2mln versus a loss the year before of US$11.2mln.

The 2018 loss was heavier largely as a result of one-off impairments of US$23.9mln recognised against balances held on the balance sheet.

Group revenue from continuing operations rose to US$38.3mln in 2018 from US$14.4mln in 2017.

The first quarter of the year- traditionally a quiet one for the industry – saw the group record an underlying net operating loss of around US$200,000 on revenue of about US$9.5mln, compared to a loss of US$7.8mln on revenue of US$13.8mln in the corresponding quarter of 2018.

The performance in the first quarter was affected by cyclones Desmond and Idai, as well as by fuel protests and currency volatility in Zimbabwe.

Cash balances as at 31 March 2019, after the Zimbabwe triggered devaluation and exchange loss, amounted to US$2.9mln, of which $1.5mln is restricted inside Zimbabwe.

READ Fastjet names seconded deputy Kris Jaganah as its group chief financial officer

Excluding one-off foreign exchange losses caused by the Zimbabwean devaluation, the board expects the current financial year will see the group make a marginal underlying operating profit but it warned that the group’s ability to repatriate funds from Zimbabwe, and the volatility of the Zimbabwean currency, remain as material risks to the business.

“Despite the impact of cyclones in Mozambique at the start of the current year and continued fuel protests and currency volatility in Zimbabwe, fastjet is making progress and expects to generate a marginal underlying operating profit for 2019, with further route expansion planned for Zimbabwe in the second half of the coming year, as well as a brand entry into South Africa in 2020,” said Nico Bezuidenhout, the chief executive of Fastjet.

Shares in Fastjet were up 5.3% in early deals.

Quick facts: Fastjet PLC

Price: 0.1502 GBX

Market: AIM
Market Cap: £5.71 m

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