African Airline Fastjet Running Out Of Cash, Shareholder Wants To Fire Manager, Director

African Airline Fastjet Running Out Of Cash, Shareholder Wants To Fire Manager, Director

Sir Stelios Haji-Ioannou, a major shareholder of African budget airline Fastjet, has demanded that the airline’s CEO and a member of its board of directors be fired, TheGuardian reported.

Haji-Ioannou owns a 12 percent stake in the airline, which is based in Tanzania. He said  he’s lost faith in the management and board, FinancialTimes reported.

A longtime critic of management at the EasyJet airline he founded, Haji-Ioannou called a general meeting citing concerns over costs. He asked to fire Fastjet CEO and founder Ed Winter immediately and remove another director, Krista Bates, from the main board.

In January Winter said he would step down as CEO when a replacement was found, but that isn’t soon enough for Haji-Ioannou, who said it was time for a “clean break,” according to a spokesman, TheGuardian reported.

Haji-Ioannou opposed Winter’s strategy of locating management and central functions at Gatwick airport, FinancialTimes reported.

Fastjet is a U.K.-based holding company for a group of low-cost carriers that are operating in Africa with plans to become the continent’s first low-cost, pan-African airline. The operation started with the acquisition of Fly540, an airline operating in East Africa. Flights in Fastjet’s name started in 2012 in Tanzania.

To satisfy local African ownership and other regulations, the Fastjet strategy is to create locally incorporated airlines using a common brand, operational standards and sales platform.

The airline has expanded operations into South Africa, Zimbabwe, Zambia, Uganda, Malawi and Kenya.

The airline trades on the London Stock Exchange Alternative Investment Market. Shares reached a record low after a profit warning in December, TheGuardian reported.

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Haji-Ioannou owns EasyGroup, a private holding company that has licensed the Fastjet brand to the low-cost African airline.

In a letter to Fastjet’s chairman, Haji-Ioannou said, “The company has a ridiculously high cost base … Winter has burnt some £80 million ($111.3 million) in the last three years. We believe the company will run out of cash sometime in 2016. We now have about six months left to steady this ship. Time is of the essence.”

For a fleet of six aircraft, Fastjet has unrealistic revenue forecasts, said Haji-Ioannou. He has opposed the idea of a Fastjet head office at London’s Gatwick airport. “This is not only a high-cost location when revenues are reported in local Tanzanian currency, but is also 4,750 miles away from Tanzania where the main operations and customers of Fastjet are located,” he said.

Fastjet launched in late 2012 with domestic flights in Tanzania, with ambitions to become a pan-African budget carrier. It has since expanded its operations into South Africa, Zimbabwe, Zambia, Uganda, Malawi and Kenya.

Fastjet’s revenue forecasts for 2016 of $186 million are unrealistic, Haji-Ioannou said. “We consider this to be a pipe dream…We simply do not believe these revenue estimates are possible with the six aircraft fleet and route structure that the company currently has available.”

Fastjet said in a statement it has “made considerable progress towards its goal to become African’s first true low-cost pan-African airline despite facing significant challenges outside the company’s control,” according to FinancialTimes