Tanzanian-based budget airline, Fastjet has announced that its results for the year would be well below market expectations.
This follows boardroom wranglings which have led to the company’s second largest investor making moves to oust Chief Executive, Ed Winter.
The shares of the airline fell to a record low 45 percent on March 7 (36.04 pence) on the London Stock Exchange before recovering some lost ground.
The company has announced it does not expect to be cash flow positive this year due to the challenging conditions in the domestic aviation market.
BBcBizzUK: Fastjet shares dive on profit warning – Shares in Fastjet fall 36% after the African budget airline,… https://t.co/D3RlatbC6O— Dr Alex Concorde (@ConcordeBizz) March 7, 2016
Fastjet operates from Tanzania and Zimbabwe and has offered “no frills” flights to undercut larger carriers seeking to copy the discount model pioneered by European airlines such as easyJet and Ryanair.
Efforts to expand into Zimbabwe last October increased the challenges, causing Fastjet to issue two warnings on its 2015 revenue and announce plans to cut capacity and costs. The airline did not detail its results warning.
Last week, easyJet founder Stelios Haji-Ioannou, whose private investment vehicle easyGroup holds 12 percent of Fastjet, said he was seeking a shareholder meeting to oust the CEO explaining that costs were too high for an airline with six planes.
Fastjet said it had $20 million in cash available at the end of February. It said this would be enough to meet operational requirements but it may raise further funds this year.
Mr Winter announced that he was stepping down last month but planned to stay with the company until 12 months after it has appointed a replacement.
Stelios however wants him to leave at once for unwanted expenditure amounting to about 80 million pounds over the last three years.