FASTJET COMPELLED TO RAISE MORE CAPITAL
Reports from a regular aviation source in the UK indicate that FastJet appears to have hurriedly raised additional capital of over 6 million US Dollars, as the no holds barred exchange of broadsides with erstwhile partner Fly540 continues unabated. Fly540 demands what now amounts to well near 8 million US Dollars from FastJet but has meanwhile withdrawn the permits and licenses granted to their former partners. FastJet in East Africa is reportedly scrambling to repair the image damage the revelations in the local media have done to their reputation in Tanzania, the only country where the airline actually does fly a few times a day between Dar es Salaam, Kilimanjaro and Mwanza, while so far no visible progress has been made in Kenya, the market they wanted to start up in but were thwarted by numerous unresolved issues with Fly 540, which eventually led to the breakup in ‘relations’.
It could not be ascertained if the raised funds are to bite the bullet and pay Fly540’s claims, or if the funds could be used for expansion elsewhere on the continent, where particularly in South Africa the deal with 1Time has gone notably silent after some considerably hullaballoo a few months ago.
In Kenya FastJet has reportedly signed an MoU with grounded airline Jetlink, which is also trying to raise additional funding to meet debt obligations before being able to resume flights, raising speculation that the 4 million UK Pounds raised by FastJet’s owners directly – through the issue of new shares and through loan arrangements – could be channeled into that new potential partnership to get airborne at last in Kenya and revive Jetlink’s extensive domestic and regional network.
It could also not be established at this time of the leasing company which had a three weeks ago issued notice that they intended to deregister some of the aircraft used by FastJet in Tanzania, actually went ahead to do so or has since then received payments to delay such action.
Going by past experiences with upstart airlines in the region, the confusion and hostile court action, resulting in negative headlines in the local media across Eastern Africa, Fastjet has flown into heavy turbulences on the PR side of things. The airline needs to replace the storm clouds with some urgent sunshine to fly either into calmer skies or else face the full fallout of a negative market reaction as seen in the past, when the first dominos started to tumble in other similar cases. Watch this space.