UK 06:17 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.
You know that things are tough when even those firms that are paid money to ramp hapless shares on the AIM Casino cannot bring themselves to do so with any conviction. And thus I bring you the latest note from Equity Development that is the piece of crap heading for 0p, FastJet (FJET). It is what ED does not say rather than what it does say that is so horrific.
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Comments
Drunken Sailor
“even after consuming $7-8m during the seasonally weaker 1st 2 months”
So for something that has happened and therefore there is an accurate figure they give a range. Yet for the 2016 year end forecast of net cash (ie cash minus debt but taking no account of receivables and payables) which is still 10 months away they give the amazingly accurate figure of $6.282 million.
But with $20m cash available – whatever that means. Burning $7-8m every 2 months leaves a negative figure. But those 2 months are seasonally weaker and things have picked up in the last 2 weeks around a seasonal event, so say burn rate averages $2m per month for the next 10 months that gives $0. They clearly have a hyper accurate crystal ball, shame that it was not working when they produced their previous paid for marketing material.
wildrides
I dont think it will go to zero but there is plenty of scope to get to the late teens early twenties . It would be interesting to see the Route Seasonality distribution figures so that we can overlay that on expectations going forward . Personally I think they have done very well to even get this far at all, given the cess pit of corruption that is cross country air commerce in Africa . They have come along way from initially stopping the service crews from being bribed to not turn in to work in the morning and fuel the planes at the start. At the end of the day if Africa ever wants to “grow up” their governments need to lend more support to the modernity revolution . As always the big C of business thwarts the the best will of mice and men .
I would imagine the financial range is because the “Actual” numbers have not been audited yet , where as the forward budget is what it is , they have simply lifted the figure direct from it . I dont think that tells you much about anything other than their accounting practise of being precise with actuals after audit is complete.
Duck and Dive
“But if you check the prior note HERE you will see that while 2017 sales numbers have been slashed from $298,811 to $132,147 million, and PBT numbers from £$17.363 million to $784,000 the cash generaed [sic] has fone [sic] from minus $16.2 million to plus $400,000. Go figure?”
They are obviously no longer assuming a fleet size of 12 aircraft including five additions in 2017. Good thing too. The mistake they made was to expand their fleet too quickly from three to six just as local conditions started to deteriorate. So, consolidation in two or three hubs will now be the order of the day rather than expansion, ie Tanzania and Zimbabwe plus possibly Kenya later this year – but presumably not Zambia or South Africa for now.
“Equity Development does not address the question of whether the $20 million cash Fastjet claims to have is net of trade payables or not.”
Which part of “net cash” [my emphasis] don’t you understand?
“In 2017 we are told that on $132 million of sales – a big uplift from $90 million in 2016 which is odd as no new routes are being opened…”
You need to understand the lingo. Firstly, according to ED, they are reducing capacity on some routes. That means, for example, flying twice a day on a route instead of three times. Thus they increase the load factor and reduce the opex. Secondly, they are allegedly “rationalising” the route network to align it with demand. That implies the suspension of some unprofitable routes but does not exclude opening new routes which can be served by more efficient deployment of existing resources.
“The idea that an aircraft can simply be sold and leased back out in Bongo Bongo land when the industry is in terrible trouble is just fanciful and has no-one told ED that second hand planes suffer a bit of depreciation in value?”
That’s not how it works. The marketplace is global. The plane was bought from a US leasing company and can be sold anywhere in the world. (They can fly, you see.) To be precise, its market value on 28.9.15 was independently assessed at $15.5m but Fastjet got a discount for cash. Since it has hardly flown since then, its current value would be not much different.
“I put it to you that with FA earnings visibility there is no margin for error here…”
Based on ED’s figures, there is over $6m of margin for error.
“… and that even if we assume that trade payables are nil ( they are not they are c$20 million)…”
I repeat, ED are quoting net cash of $20m so either trade payables are now nil or, more sensibly, Fastjet have over $20m of gross cash. This is really simple if you bother to read their document. Of course, you are free to call them – and Fastjet – liars and I, for one, would like to see where that gets you.
“…this company is teetering on the brink of insolvency or soon will be.”
Let me see now…$20m net cash plus a readily saleable $15m aeroplane. Looks to me as though they are well positioned to avoid insolvency for the foreseeable future — especially as the big one-off investments in setting up the new Zimbabwe hub and new regional offices have already been made…and overheads, including the Gatwick office, will be cut if Stelios gets his way.
Tom Winnifrith
D&D without answering you whole essay as it is all piffle but the key point:
net cash refers to cash net debt. So you fucking retard, ED & you are still not discussing trade payables. I am not saying FJET has a overdraft but it has payables – why cant you get that thru your thick head?
T
Duck and Dive
“net cash refers to cash net debt. So you fucking retard, ED & you are still not discussing trade payables.”
In accounting terms, current liabilities (eg trade payables) equate to debt and are therefore included in net cash. I shouldn’t have to be telling you this: check out Fastjet’s H1 interims and specifically the Condensed Consolidated Cash Flow Statement…
http://www.fastjet.com/img/stand_alone_files/file/original/interim-results——280915-final-89.pdf
Save your profanity and abuse for those likely to be impressed or intimidated by it.
Tom Winnifrith
D&D
thus is getting painful now as you insist that balck is white. Go to any results RNS and you will see that what you say is just plain 100% untrue. CLs will include bank debt due within a year and also trade payables. Net cash is cash minus debt.
Question still not answered by FJET, ED or you. Stop being a fucktard in denial, this is really basic accountancy and you are just wrong
T
Stuart Kaplan
TW is correct. Net cash (or debt) is cash minus debt. If you are putting in any trade receivables or payables you have a measure of net current assets, not net cash.
I note ED says it has ‘kitchen sinked’ it’s forecasts. Can I suggest it should have ‘bathroom toileted’ them instead?
phil
The chances of this one surviving is nil . this is a 0p. Unless of course you want to carry on funding until the end of time.
You could give it a chance by stopping your foreign aid program, but to do that you will have to stop electing useless politicians, and as I see no sign of that, this really is a game over, and you were warned
Vote Brexit, If only you would
Drunken Sailor
Good now the meaning of Net Cash (Debt) is understood – it is a proper accounting term. The hyper accurate forecast for the end of 2016 is Net Cash. However “still $20m of cash available as at the end of February” is not necessarily net cash. cash available is not an accounting term. I doubt it is Net Current assets – they have not audited the books for end Feb. It could be cash in the bank, it could also be cash in the bank plus any headroom they have on overdraft facilities. Either way comparing the $20m cash available figure, whatever it means, with the cash burn over the previous 2 months, even accounting for improvements, still means they do not have enough cash available, whatever that means, to get through the year.
Reorganising things to save Opex generally comes with quite significant exceptional costs – it does not matter whether costs are exceptional or not it is all money and when you do not have much money that is bad news in the short term.
When you are a forced seller of something (unless you are QPP flogging frauds and shit businesses to SGH) you generally get a poor price. The global market for aircraft is not exactly booming – why did FJET get a good deal in the first place?
The only real hope for FJET is Stelios taking the reins. FJET is already in the 99% club and could easily join the 99.99% club. Where is the upside?
Duck and Dive
“Stop being a fucktard in denial, this is really basic accountancy and you are just wrong.”
This might help you to get a grip:
“What is ‘Net Cash’
Net cash is a company’s total cash minus total liabilities* when discussing financial statements. Net cash is commonly used in evaluating a company’s cash flow. More generally, net cash can refer to the amount of cash remaining after a transaction has been completed and all charges and deductions related to the transaction have been subtracted.”
http://www.investopedia.com/terms/n/net-cash.asp
*“What are ‘Total Liabilities’
Total liabilities refer to the aggregate of all debts an individual or company is liable for. Total liabilities can be easily calculated by summing all of one’s short-term and long-term liabilities, along with any off balance sheet liabilities which corporations may incur. On the balance sheet, total liabilities plus equity must equal total assets.”
http://www.investopedia.com/terms/t/total-liabilities.asp
Tom Winnifrith
D&D
Net cash = cash minus debt. Investopedia is wrong and so are you. ask someone who has done some training in accountancy ( like er me) and stop being a fucktard
I am not going to debate with you on this any longer as you are just so plain wrong
T
Stuart Kaplan
Sorry D&D, Investopedia is just plain wrong there.
All cash is an asset, but not all assets are cash.
All debt is a liability, but not all liabilities are debt.
‘Net cash’ is, has always been, and always will be, cash less debt. As soon as you start adding in other bits of liabilities (trade, government creditors, employees, whoever) you have some measure of net assets, not net cash (or net debt, if debt is greater than cash).
Duck and Dive
“NET CASH
The amount of cash-on-hand claimed on financial statements after subtracting current liabilities*. Net cash is typically an indicator of a company’s cash flow position at the end of a reporting period.”
http://www.businessdictionary.com/definition/net-cash.html
*“CURRENT LIABILITIES
Obligations such as deferred dividend, trade credit, and unpaid taxes, arising in the normal course of a business and due for payment within a year. Also called current debt.”
http://www.businessdictionary.com/definition/current-liabilities.html
Plenty more I can quote if you continue to be abusive.
Duck and Dive
“We will break even in 2016.”
- Fastjet general manager, John Corse, speaking yesterday
http://www.thecitizen.co.tz/News/Business/We-ll-reach-break-even-point-2016—says-Fastjet/-/1840414/3109046/-/i2vkcq/-/index.html
Drunken Sailor
Reaching break even point and breaking even are different. You can achieve a breakeven point in Dec 16 and claim to have achieved the former, whilst the latter implies you have broken even over the year. QPP was cash flow positive for 1 month by delaying payments and chasing in debtors.
There are lots of break evens is it PTP break even, Operating break even, EBITDA break even, adjusted EBITDA break even or is it cash flow break even?
By being ambiguous in his terminology he is just providing meaningless pap to keep BBMs happy while a placing is done. It is clear that they have no earnings visibility and no idea how much they can cut costs and how much it will cost them to cut those costs. Even so, if he wants to, he would have no trouble achieving cash flow breakeven in Dec, just as QPP did in Jul 14.
Duck and Dive
@DS – well aware of that: Fastjet even managed to make an operating profit in Dec 2014 (http://goo.gl/PbACh1). But shareholders haven’t been led to believe that they will break even for the full 2016 year. It’s a milestone they need to reach at some point, even in December, with credible assurance that it can be maintained and surpassed.
Drunken Sailor
“credible assurance that it can be maintained and surpassed.”
That is their big problem. Credibility – they have none. The cash will run out that really is obvious, they will need to do a fundraise in the not too distant future. If Stelios can take the reins at least he has credibility and a lot of cash. He may be able to save the business, but that is not the same as saving the shares.
I recall an annual report followed by and AGM statement signed off by Nomads that said directors were confident they would be cashflow neutral by the end of 2014. Even now the company has not received a penny in revenue. Nobody can accurately predict the future so they can say what they like and say “Apologies, we were far too optimistic” time and time again giving different excuses and promising jam tomorrow. It is in their interests to do so when:
a. They need to get a placing away.
b. There is a threat of them getting booted out.
Duck and Dive
“The cash will run out that really is obvious”
Not if you understand where the company is both its development cycle and the travel calendar. A lot of cash has been spent developing new hubs and new routes without any peak season to indicate how successful they will be. Their planes are already starting to fill up for Easter. Without Easter, summer hols and Christmas traffic, most airlines would never report a profit; so the proof of the pudding will come over the next 4-5 months when the capex and opex will hopefully start to pay dividends.
Drunken Sailor
D & D,
I bet you a bag of salt and vinegar they will have to do a placing before Dec because the cash has run out.