Fastjet plc (LON:FJET) Chief Executive Officer Ed Winter caught up with DirectorsTalk for an exclusive interview to discuss the recent cash raise and their plans for expansion
Q1: Lots of developments at your company and a cash raise as well, could you explain the rational and what you’re going to do with the money?
A1: We’re really pleased to have had that level of confidence from the new investors. We’ve raised £50 million, or $75 million and that’s to enable the company to expand beyond Tanzania. We’ve built the foundations in Tanzania for the last 2 years, established a really robust operation showing a low cost model absolutely works in Africa and now we’re ready to expand. We’ve identified 5 other countries; Kenya, Uganda, Zambia, Zimbabwe and South Africa, which combined with Tanzania gives us a total population of about 210 million people so about a fifth of the African population with those 6 countries and about the same level of potential GDP. Our intent over the next three to three and a half years is to establish Fastjet airlines in each of those countries starting with Zambia, followed very closely behind with Zimbabwe and these funds enable us to put the investments into those countries to create that expansion and build the Fastjet network.
Q2: Obviously the expansion is great news and great news for the people living in these countries as well. Last time we spoke about the oil price decline helping you and basically putting money in your pocket, how is the existing business going?
A2: The existing business is doing great. We just had our first profitable month in December 2014 and the business is continuing to grow year on year. The numbers are very robust but what we now need to do is expand the business further and that will enable the overhead to be spread further and really create value within the company for our investors.
Q3: In terms of the momentum that the oil price has given, what are the sort of profit outlook from your prospective at the moment?
A3: Well certainly the oil price has given us, as it has to a lot of the airline industry, a great boost. We weren’t hedged so we’re actually benefiting directly from the market price, it takes a month or two to filter through to Africa because of the logistics of getting the fuel there but we continue to see month on month fall in oil price and considering that oil represents about 40% of our cost base, that’s absolutely vital to us.
Q4: In terms of the outlook, you would consider it positive even without expansion?
A4: The outlook for the current business in Tanzania is positive but clearly running a small airline in 1 country isn’t what the vision of Fastjet was. Our vision is to, grow a network throughout Africa and having laid those foundation in Tanzania, that’s what we’re now embarking on.
Q5: Will the expansion be affected by economic conditions or geo-political issues in Africa? How much of that can you factor in? Is that an influence in what you’re doing?
A5: Yes, we’ve taken a lot of effort to ensure we fully understand the regulatory, the political and the economic conditions of these countries and each country varies a little bit from the others but we’ve taken into account all of that in our business plan.
