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https://www.breakingviews.com/considered-view/fastjet-turbulence-flags-african-continental-drift/
Revenues rise year on year from 21.2 million USD to 30.1 million USD
Loss increases year on year from 13.2 million USD to 14.6 million USD
Those were two of the key elements of the airline’s announcement in London yesterday when the H1 of 2018 results were published.
Key highlights, published below, point to continued regulatory interference and probably deliberate delays by Tanzanian aviation authorities in the registration of the airline’s ATR aircraft which were due to be deployed months ago. This suggests the full extent of what the Tanzanian government is prepared to inflict on an investor in favour of building up their hitherto almost moribund national airline, tilting the playing field and further eroding international market confidence, in part also following their decision to prohibit international arbitration, leaving investors with grievances at the mercy of a local court system under the thumbs of the powers that be.There is now a distinct possibility that, as a result of such regulatory shenanigans private airline will be pushed to the wall by creating a heavily tilted playing field in favour of Air Tanzania. It seems obvious that after serving the Tanzanian market faithfully for many years and making air travel affordable for their tens of thousands of passengers, they have served their purpose and can now go – and when that happens can ticket prices once again shoot through the roof, hitting tax payers twice.
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I can not believe the guy is that thick. If he is, he is the most fortunate idiot I've ever read about. If the cleaning lady you mentioned had been appointed CEO would the result have been any worse? I doubt it because she couldn't have made it worse.
Fjetcrazy .My Thoughts exactly, how many times do you need to be reigned in by the powers that be before learning to be more cautious next time, 3 apparently.
But even if you are testing the water to see if they are as good as indicated, you do it with 1 new aircraft, when it is accepted and operating, you can take another, when that is accepted and operating you can take the 3rd.
It should have been apparent to even the cleaning lady that this was a risk too far. In 40 years running my own Business I have never taken such a rash decision as this.
Maybe with someone else's money and with the benefit of $400k salary anyway, he was too quick to try rapid expansion to reach the share options and threw caution to the wind.
You could not make it up, he talks about hindsight re the ATR72, he KNEW the problems faced with E190 regulation but assumed it would be different with ATR72 as these already operating in TZ.
I wonder who he has been talking to in London and if he has come back empty handed.
If I was starting an airline in Africa , I might consider employing the present Fastjet management based on their knowledge of the airline industry ; as baggage handlers mainly with perhaps one or two of the more intelligent ones on the check in desk.
B.Schulz, I’m not sure how on one hand you can stick up for Nico claiming TIA and then in the very next sentence blame Ed for getting fastjet into this mess in the first place. Slightly hypocritical. Yes, Africa is a challenging place. But the cost of a fleet replacement is astronomical. To then try and add a second fleet (and without any assurances that it can be deployed) is unnecessarily bad risk taking. Finally, Nico’s remuneration is outrageous. Yes, if he’d turned it around and he was keeping some of the profit I’m sure shareholders would be more than happy, but that’s just not the case.
Mr Schulz - you really make me laugh. Of course we all know that Africa is a difficult place to do business - we're not stupid! But come on - are you really trying to convince people that Nico stabilised the business? Has he even got the right model with the aircraft type he is running? Why, with a load factor of 75%, are these losses widening? Where has all the money gone? Around one billion dollars has been pumped in and all we've had are incompetent individuals at the helm signing off their half million cheques and awarding themselves a cash pile for serious failings. Are you invested Mr Schulz? They got involved with Henderson years ago and that relationship was toxic.... realistically they should hold their hands up, sell everything and give something back to shareholders - they've been back at the begging bowl too many times - they do not deserve to continue trading.
Nico has been as big a disaster as Ed.He has not cut costs in the last 12 months burned cash etc.The 3 aircraft sitting in Toulouse the mind boggles on what plans he had for them .
He knew what the 6 months accounts were in June when he went to the shareholders and fed them with a rosy picture
I think all the negative commentary on this page, especially about Nico is nonsensical. The strategy is sound, but this is Africa, and if you are reasonably versed in the current political economy of that nation you will be aware that they seem to be destroying the mining sector too and highly suspicious of any FDI. In addition, Fastjet already turned Zimbabwe around and Mozambique is doing well. Nico’s pedigree and successes at Mango and SAA earned him the job and if you have closely followed the fastjet narrative you would know the legacy issues the new team have had to deal with thanks to Ed. This is a fastjet version 1 hangover, and what they – the new team - have achieved in a year, in Africa – a tough place to do anything as it is, makes all the nasty comments on this page an expression of ignorance rather than insight.
The salary awards for the BoD's are all so incestuous. The 2 Executive Directors remuneration (Nico Bezuidenhout and Michael Muller) is decided by the remuneration commmittee, which comprises the 3 Non Executive Directors on the Board (Rob Burnham, Rashid Wally and Peter Hyde).
The full 5 man BoD's then discuss and decide what the 3 Non Executive Directors salaries/fees should be.
So the remuneration of all 5 menbers of the BoD's is hatched up amongst themselves with no external input.
https://www.fastjet.com/upload/Documents/Fastjet%20Annual%20Report%20and%20Accounts%202017%20(H).pdf
Nico’s Salary is listed here as $410,000 for FY 2017. Additionally, he was awarded a $400,000 signing on bonus in August 2016, payable this year. An astronomical salary for an individual presiding over a continuing financial loss. They’d have done about as well by hiring a circus clown and just leaving him in the local pub!
An expensive lesson in not knowing enough about the market or the management team
The latter Ed and his cronies and lately Nico are and were never capable of running any type of business,they never understood that cash flow is the lifeblood of business unfortunately they managed to keep cashing their pay checks at the epense of all the shareholders
I am not so sure that the execution of the business plan was the problem. The plan itself was the problem. Anyway, another lesson learnt by those caught up in this adventure. Today, as share ownership is being aggressively promoted in the media, people new to this área would be well advised to study the Fastjet case. There are many more disasters, wipeouts, of course, but few that signal so clearly over quite a long time that something was very wrong. I know people might say that I am talking from a point of hindsight but I never bought any. I've bought duds, for sure, everyone has. I got out of some in time, and others took my money down the sinkhole with them. I also know I am writing this on a discussion board, but my advice is don't pay too much attention to what you read on these fórums about the merits of a particular share or get caught up in group euphoria and start running downhill after a share. Thanks to all ifor the humourous exchanges and I am sad about Fstjet.
nuri123, given that the story in Zimbabwe and Mozambique seems to be very different to the one in Tanzania I can see FJET surviving, but in effect being taken out by Solenta and so plc shareholders will lose out (as will customers in Tanzania as I suspect that operation will be pulled too).
Can't argue with the hubris of Ed and Nico though as the FJET story is one of (exceptionally) poor execution of a business plan.
Bye....
Congratulations to Ed Winter and Nico for their consistent bias and over optimism throughout the last six years. This airline is definitely finished. I have no regrets in saying this was my poorest decision in my life. I'll be glad when this airline folds - they shouldn't be in charge of $10 let alone almost a Billion dollars.
We have been sabotaged by the Government of Tanzania who have deliberately arranged for delays and refusals to benefit the State Funded Airline. This is not a level playing field and Open Skies are a joke.
The aim seems to be to drive us out of Tanzania, then the State Sponsored Airline can revert to normal practice and put up prices and let the people of Tanzania suffer.
Nico was complicit in this endeavour by stupidly believing indications of agreements that were not irrevocable and by committing to not 1 at a time but unbelieveably 3 at once of the ATR's any sensible person with their own money at risk would have only taken 1 at a time after each bedded in and profitable.
WE Have been Stuffed by the Tanzania Government and Management Stupidity.
Nico has failed in spectacular fashion. He claimed he would reduce costs. This is how he sold himself to shareholders and also to the ex chairman to achieve the CEO position. The figures speak for themselves. Cost per ASK was 13.3 cents in H1 2018 vs 10.88 cents in H12017. A staggering INCREASE of 22%. No sign of a reduction in costs whatsoever. And what was he thinking with the plan to introduce yet another fleet, what a rediculous idea. A real shame the remuneration of the board is not available in the accounts, I sincerely hope that Nico has in no way been rewarded for his failings. He would have been rewarded handsomely if he had succeeded as part of his deal with the share options (30p)
Bomb
Turns the landing strip lights out when your done
this makes it more positive for fjet with a major competitor out of business majorshareholders will see the positive out of this
This is shocking news, sorry guys I really hope those still invested can make losses back elswhere.