UK 06:51 Wednesday, 21 October 2026
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Having slipped badly following its profits warning and the start ( yes start) of a process of scrutiny by the Sheriff and his posse, the share price of FastJet (FJET) is up by 20% to 52.75p today thanks to news that it is launching flights from Tanzania to Kenya. Fear not this remains a sell with a 0p target.
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Comments
DUCK AND DIVE
You’re just digging yourself a deeper hole and would have done well to wait for the properly researched analysis of your SP colleagues.
Just for starters, the $80 fare is only available to the few who book months ahead. Thereafter, prices will gradually increase as the plane fills – and will still be cheaper than the competition who seem to be asking $325 (Precision Air), $404 (Ethiopian), $438 (Kenya Airways) and $993 (South African Airways), according to this comparison site:
http://www.farecompare.com/flights/Dar_Es_Salaam-DAR/Nairobi-NBO/market.html#quote
$80 is not the standard fare: it is just the headline fare for earlybirds. And there is serious year-round demand on these new routes into Kenya so no comparisons can be drawn with internal Tanzanian routes where traffic is variable. CEO, Ed Winter said right at the start that Fastjet’s success would be dependent upon securing these routes into Kenya and it has taken three years to get them.
Please also look closely at the liabilities – most of which are long term (2-5 years) lease and maintenance commitments. If they sell a lease then the liability disappears with it. So you need to focus on current liabilities. Bear in mind too that they have recently purchased a plane (the first they have owned outright) so that now becomes a tangible asset – albeit they have also recently added two new leased aircraft to their fleet.
You also need to review the intangible assets and especially the AOCs since Fastjet has recently acquired AOCs for Kenya and Zimbabwe.
And you need to get a grip on the currency risk as outlined in note 21 of the last accounts – noting especially that the biggest liability is in Tanzanian shillings which will have been considerably reduced by forex fluctuations.
Then there’s fuel, which is (or used to be) every airline’s biggest operating expense. Having once accounted for 40% of Fastjet’s opex, it should now be under 20%, albeit it takes up to three months for fluctuations in crude price to be reflected in jet fuel costs.
And every new hub (Zimbabwe has just been launched and Kenya and Zambia will follow soon) spreads the central overhead which had previously weighed heavily on the single Tanzanian hub.
Real debt is tiny. At the end of last year they had used $5m of an overdraft facility but they have no other material borrowings apart from the standard lease financing arrangements which can be disposed of, along with the leased planes, in extremis. They have cash coming in before every flight and will soon have much more, thanks to the new and upcoming routes and a new interline agreement with Emirates.
Progress has been slow. Early investors have been diluted to hell and late investors (apart from this week’s traders) have seen the SP drop – partly due to election fall-out in Tanzania, partly due to currency concerns (albeit while Fastjet continues to invest $ in Africa, the local currency drop is helpful) but primarily due to the extended delay in getting permits from Kenya, Zimbabwe and Zambia, all three of which have come to hand in recent weeks.
It remains to be seen whether Fastjet can become cash generative before they need to raise more finance; but today’s news about the Kenyan routes is a huge step towards that goal. Meanwhile, competitors such as flyAfrica and Skywise have recently been grounded, thus opening up the skies to a properly run low cost carrier – if not yet a profitable one. But anyone who expected Fastjet to make a profit in its first few years was living in la-la land. New airlines are all about heavy capex up front and Fastjet have done the donkey work now.
wildrides
Nice piece of Whini maths and Vendetta fogged analysis . Seems I am not the only one to have caught on to your Global Shorting Conspiracy agenda weak spot .
The price will out .
DUCK AND DIVE
So, after slipping “badly” on the 22nd (down 7% actually) Fastjet’s SP soared 21% yesterday on news of the imminent Kenya routes and climbed a further 5% today. Looks like it has finally turned a corner – as those of us who have done due diligence knew would come. Yes, it’s slow going. Yes, they will report a hefty loss again for 2015. But all too many PLCs will do that too. All too few of them are real businesses though whereas Fastjet has all its infrastructure in place and has already carried 1.5m passengers – many of them first-time flyers – efficiently and safely (a rarity in Africa). They have also demonstrated that they can generate an operating profit – when fuel was 40% more expensive than it is now.
It hasn’t been cheap, nor has it been easy with incumbent over-charging state airlines trying to block Fastjet’s expansion at every turn. But this week’s news about the coveted Kenya routes, combined with the upcoming news from Zimbabwe and Zambia, will finally put Fastjet en route to its pan-African destination.
I expect it to become cash generative at some point in 2016 and to report its first FY profit in 2017. If it needs to raise more cash along the way, it will be on a very different basis from past fundraisings with key branches of its network finally in the hold.
I speculate to accumulate and the accumulation phase is now a lot closer. Baby Bear and TW clearly don’t understand what a new low cost airline needs to go through, nor how its pricing model works. More research needed.
And just for clarity, Fastjet has no involvement with Lenigas. If they did, I would not be a shareholder.
Duck and Dive
Cracking rise, Gromit.
http://goo.gl/N1RtPw
Duck and Dive
And still she rises. Just pushed through 70p as I write. Baby Bear and Uncle Tom really should do their research before rushing into print.
Speaking of which, has the almighty ShareProphets team done the promised legwork yet? Or are you waiting/hoping for a retrace? I saw that you tried to bushwhack Zak into calling this a dead cat bounce but his conclusion was:
“This is the kind of charting combination which one only sees in the most robust of situations…”
Ho hum…another day, another dollar – but not for Baby Bear…
http://stockcharts.com/c-sc/sc?s=FJET.L&p=D&yr=0&mn=1&dy=0&i=t39797694578&r=1451465146353
Duck and Dive
As 2016 rushes in, I note that Fastjet outperformed the FTSE100 in 2015. The FJET share price ended the year a modest 0.7% up whereas the FTSE100 dropped by 5%.
Remarkably, Fastjet’s rise was achieved despite issuing 5,000,000,000 new shares in April which accounted for 75% of the newly enlarged share capital.
Happy New Year.
Duck and Dive
The significance of Fastjet’s newly acquired Kenya routes is clear to this reporter:
http://www.dailynews.co.tz/index.php/features/45840-air-travel-in-east-africa-set-to-change-as-more-carriers-take-to-skies
Duck and Dive
I see that in this morning’s (12.1.16) “news” sidebar, ShareProphets invents the notion that Fastjet’s first flight to Kenya yesterday was loss-making. Credibility disappears very quickly if guesswork/invention is presented as fact. That’s how the bulletin boards work – and why they aren’t worth reading.
Anyway, for those who couldn’t be on yesterday’s inaugural flights into Kenya, see what you missed:
https://www.youtube.com/watch?v=sdJutUHLDCY
https://www.youtube.com/watch?v=nK9wBblYC-o
The price of crude is today pushing down towards $30pb. This is half what it cost when Fastjet managed to report its maiden monthly operating profit a year ago.
Tom Winnifrith
how much do planes cost, what is depreciation, how much do staff cost, what do landing slots cost, what % of PLC costs are allocated per route & FJET is charging 50 bucks a seat, If you think it made money on that you are crackers
Duck and Dive
Please don’t be disingenuous. Fastjet Tanzania may still be loss-making but that doesn’t mean that the inaugural Kenya flight was loss-making at the operating level…Given the number of free-seat dignitaries on board, it may have been loss-making but none of us knows, including you. Looking at the heavy stream of disembarking passengers shown in this just-posted video, it could have been a profitable flight notwithstanding the freebies:
https://www.youtube.com/watch?v=5IPOQsIlbJI
And if you watch to the end, you will see a Tanzanian minister pledging his government’s support to Fastjet – which presumably means at least that all government employees will be instructed to fly low-cost with Fastjet to Kenya.
So, with government support, shareholder support and finally a serious international route network to ply, things are looking up for this 0p stock. Dare you pick it to short in your 10 tips for 2016? Whatever happened to 8, 9 and 10 by the way?
Duck and Dive
So CEO Ed Winter steps down (at well past retirement age) in the pink afterglow of the transformational Kenya route acquisition. And there breaketh the last vague/hazy/long-forgotten link to your chum Lenigas.
I’m very sorry to see him go but it must have all got a bit hectic for someone approaching 70 summers.
At 2.30pm, the market is undecided.
Duck and Dive
It seems that Fastjet’s good news isn’t deemed fit for the ShareProphets news sidebar. Maybe it keeps falling victim to heavy news from other companies. Maybe the sidebar is now only used for negative news which suits ShareProphets’ agenda.
Anyway, today’s good news RNS – missing from the sidebar – is that Fastjet has been granted major new routes for its new Zimbabwe hub, including the popular and currently over-priced Harare-Johannesburg route and one of Africa’s biggest tourist routes, Victoria Falls-Johannesburg. And more are on their way.
Today’s news comes hot on the heels of the granting of game-changing new routes to Kenya for Fastjet Tanzania – none of which seems to be what Uncle Tom wants to hear. But to deny it even a mention in the daily news sidebar seems a tad Big Brotherish.
TW: ok just to keep you happy I will add it in :)Duck and Dive
Yes – but you made up the bit about the new Zimbabwe routes being loss-making. That kind of disinformation could land you in trouble – and it certainly diminishes the credibility of this site, which saddens me. You can’t just invent “news” to please yourself.
TW note - At 80 bucks, profitable? You are avin a bubblewildrides
“Cant make up news” oh but Whinny can and he does ……………..but people are catching on ………. apart from Drunk …who is …..err …… mostly likely drunk judging by the name selection .
Duck and Dive
Your obtusity condemns you to permanent disinformation. Worse, you can’t be arsed to learn the business model of low cost carriers because you suspect that the facts will not suit your agenda.
It’s pointless reminding you but $80 is not the average Fastjet fare on this route. It is just the earlybird offer price. Once the initial tranche of $80 seats has been sold, well in advance of the travel date, the price goes up for the next tranche, and so on.
The cheapest competitors’ fares are considerably higher so Fastjet has plenty of scope to fill their plane at terminal prices up to double the earlybird tariff.
For good measure, Fastjet has previously invested in the necessary infrastructure at Harare and Johannesburg.
Here’s a bit of LCC history for you. FlyAfrica – now grounded by the regulators – was able to offer an earlybird one-way tariff of $39 on this route last year. But that tariff only applied to a few seats booked well in advance of the travel date. They too made their money by charging higher fares as their planes filled up.
http://www.newzimbabwe.com/news-21295-Airline+offers+$39+Hre-Joburg+flights/news.aspx
Duck and Dive
The Harare-Johannesburg route is an industry “cash cow” with Air Zimbabwe, British Airways/Comair and South African Airways among the conventional airlines operating daily flights, according to the ever-reliable “New Zimbabwe”:
http://www.newzimbabwe.com/business-27211-Fastjet+says+to+launch+Harare-Joburg+route/business.aspx
In other words, it should quickly become a massive earner for loss-making Fastjet – difficult as that concept may be to grasp.
PS. Typo (missing word) in this morning’s news sidebar headline:
“Fastjet (#FJET) hires ex Ophir bird as its new FD”
Duck and Dive
Stelios RNS announcing EasyGroup concert party purchase of 1.2m more shares taking total to 12% presumably hasn’t been deemed negative enough to make your news sidebar so I’ll help you out:
“Stelios wastes £3/4m on more worthless shares in loss-making Fastjet”
Duck and Dive
Seems to be a long time coming, but assuming you are still working on it, this might help ShareProphets’ crack Fastjet research team…Credible independent new route analysis by CAPA – part 1: Kenya:
http://centreforaviation.com/analysis/fastjet-2016-outlook-part-1-kenya-expansion-following-breakthrough-tanzania-kenya-launch-262634
Duck and Dive
I doubt that Motley Fool pundits get much kudos around here, but Peter Stephens of that parish writes today:
“Shares in Fastjet (LSE: FJET) soared by as much as 10% yesterday and this brings the budget airline’s gains to 47% in the last month. A key reason for this is the approval of new routes during the period that have the potential to transform the company’s long-term financial outlook. For example, Fastjet now operates daily flights between Kenya and Tanzania, with approval being granted in recent days for flights between Zimbabwe and South Africa too.
“While Fastjet is expected to post a pre-tax loss of £21m for the 2015 financial year, its bottom line is forecast to move into profit in the current year. In fact, Fastjet is due to report a pre-tax profit of £6m in 2016 and even though its shares have risen by such a large amount in recent weeks, it still trades on a price-to-earnings (P/E) ratio of just 8.1.”
http://goo.gl/jWNcWU
Duck and Dive
Part 2 of CAPA’s analysis of Fastjet’s routes and prospects looks at Fastjet Zimbabwe and Fastjet Zambia, focusing on the huge potential of routes from these hubs into South Africa, concluding that “fastjet has so far survived, but has by no means thrived. 2016 could be a critical year as it attempts to leverage its first mover advantage, launch several new international routes, and carve out a sustainable role in a difficult region.”:
http://centreforaviation.com/analysis/fastjet-2016-outlook-part-2-south-africa-expansion-with-routes-from-zimbabwe—potentially-zambia-263099
Duck and Dive
“Suffice it to say, the self-proclaimed local aviation ‘pundits’ got it all wrong because with the entry of fastjet, Tanzania’s first low-cost carrier in the local aviation scene, the archaic and antiquated thinking from the doubters was blown out of the sky, so to speak!
Today, Fastjet has beaten all the odds and in a span of only three years, the budding, fast-growing premier low-cost carrier has not only ‘felled the giants’ but almost, in one great swoop started ruling Tanzanian and indeed the region’s clouds…
…Fastjet’s rapid growth, if looked at from the prevailing changing social-economic paradigms in the East African region, is a harbinger of a bright future for the airline. The airline’s durability and sustainability is even given more impetus by its uncanny ability of staying afloat even when the general business prospects look grim for the rest of the pack.”
http://www.ippmedia.com/?l=88283
Patience is a virgin.