Shares take off as FastJet outlines rescue plan
The airline warned earlier this week that it is at risk of going bust.
FastJet shares have rocketed after the struggling budget airline outlined plans to secure emergency funding of up to 12 million US dollars (£9.1 million) as it looks to stave off the threat of collapse.
The carrier, which offers budget flights across a number of African countries, warned earlier this week that it is at risk of going bust.
On Friday, FastJet said it will commence a share sale to raise 7 million US dollars (£5.4 million), while its biggest shareholder Solenta Aviation will pump 3 million US dollars (£2.3 million) into the group.
In addition, the company wants to raise up to £1.6 million by way of an open offer.
The funds will provide the group with “sufficient working capital for the remainder of 2018”, FastJet said, having warned it had a cash balance of just 3.3 million US dollars (£2.5 million) on Wednesday.
Half of the new money will be allocated to support its Zimbabwe and Mozambique operations and to pay off loans.
In addition, Solenta’s chief executive Mark Hurst will join the FastJet’s board as of next week.
Investors warmed to the news, with shares in the firm rocketing 136%.
Separately, FastJet confirmed a dismal year with bruising annual losses.
Revenues fell to 46.2 million US dollars (£35.3 million) in 2017, down from 68.5 million US dollars (£52.3 million).
The firm booked an operating loss of 25.3 million US dollars (£19.3 million), compared with 65.6 million US dollars (£50.1 million) last year.
Over the past two years FastJet has been reducing costs as part of a stabilisation plan.
Neil Wilson, chief market analyst at Markets.com, said: “Lower costs in particular should be welcomed by investors, but how they got to this state where they are risk of running out of cash today is pretty shambolic.”