Fastjet shares sink despite reports of steady progress

Shares in African low cost airline Fastjet (LON:FJET) sunk in early trading on Friday, despite the company making “steady process” in the rolling back of its ambitious expansion plans.

Fastjet were forced to backtrack on their plans after announcing heavy losses in the first half of the year, cutting capacity by 25 percent to significantly reduce their cost base. In a statement ahead of its AGM on Friday, Fastjet announced that the re-fleeting process, relocation of its headquarters from London to Johannesburg and a right-sizing of its operations in Zimbabwe and Tanzania were making “steady progress”.

The company also announced that it has entered into an agreement with easyGroup Holdings to acquire all intellectual property rights associated with the fastjet brand for a total consideration of $2.5 million. Sir Stelios Haji-Ioannou, who established the fastjet brand in 2012 and founded easyJet in 1995, said:

“Fastjet is a great brand in all its African markets, making it a highly valuable asset for the company. I have accepted the view of the current board that the company should own its own brand rather than licence it from me. I feel we have agreed a fair price for its transfer – $2.5 million – which is less than what the company would have had to pay over the next five years. I still hold shares worth about £1.3 million in the company and as such I will be a supportive shareholder, hoping to realise significant upside potential as fastjet grows and prospers.”

In May the company reported disappointing figures for the 2016 financial year, recording a losses for the year after tax of $21.9 million. Shares in Fastjet traded down on Friday on the back of the announcement, currently down 1.33 percent at 16.28 (1011GMT).