Fastjet warns on future as FedAir sheds jobs, cuts wages
By Frank Prenesti
Date: Tuesday 07 Apr 2020
(Sharecast News) - African budget airline Fastjet warned that its future was under threat unless it raised fresh capital or sold its Zimbabwe operations as jobs and salaries were cut in response to the coronavirus.
The company, hit by the industry-wide collapse in air travel demand due to the pandemic, said it had enough resources to cover operational needs until the end of June.
Fastjet said its Federal Airlines shuttle and charter business, which services the tourist safari industry in Southern Africa, would cut 55% of its full-time workforce and employees had taken a salary reduction of up to 30%.
"FedAir has seen a dramatic downturn in forward ticket sales and reservations and the majority of passengers that were booked have deferred their travel into the fourth quarter of 2020 or the first half of 2021," the company said on Tuesday as foreign tourists stayed at home due to travel bans.
It did not expect significant shuttle or charter bookings for at least the next six months and had terminated a portion of the 14 aircraft fleet which was leased, but kept the four aircraft it owned.
Fastjet, which has been struggling to sell its Zimbabwe operations, again warned that it would not be able to continue as a going concern if it was unable to complete the sale or raise additional capital by June 30.
Losses for African and Middle East airlines due to the coronavirus had risen to $23bn and governments needed to intervene rapidly, the International Air Transport Association (IATA) said last week as it repeated its call for co-ordinated action from governments in the form of direct financial support, loans, loan guarantees, support for the corporate bond market and tax relief.
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