Fastjet says coronavirus threatens its finances

(Sharecast News) - Fastjet said coronavirus posed a threat to its fragile finances as the budget African airline cut flights after a slow start to 2020.
The budget African airline said it was monitoring the impact of the coronavirus and would make schedule reductions if the spread of the disease caused big reductions in bookings.

The company said the coronavirus could damage its financial position as it tries to sell its Zimbabwean operations and that if the deal does not complete by 30 June it would be unable to trade as a going concern without new capital.

FastJet said trading in the first two months of 2020 was slightly below expectations caused mainly by too much capacity in the Harare-Johannesburg and Bulawayo-Johannesburg markets. Fastjet Zimbabwe will cut flights for the next 100 days on oversupplied routes.

The company said delays to its proposed sale of Fastjet Zimbabwe had left it with minimal cash resources and it was vulnerable to "any significant downturn in business which could be triggered by any widespread impact in the region from the COCID-19 virus or any other unforeseen circumstances".

The company said South Africa had announced 13 cases of the COVID-19 coronavirus and that none had been announced in Zimbabwe. FastJet said it was monitoring changes in demand and booking patterns from the outbreak.

"Contingency plans to mitigate the effect on the business and the group's operations are already in place," Fastjet said "The group is prepared to enact further schedule reductions, if required, due to any escalation in confirmed cases of the COVID-19 virus which could result in vastly reduced passenger bookings as is currently being experienced in Europe and other parts of the world."

Europe's airlines have been battered by reduced demand and travel restrictions caused by the coronavirus. Flybe went bust in the UK and British Airways has cancelled all flights to and from Italy.

Fastjet said the consortium attempting to buy the Zimbabwean business was committed to the deal and that it had been given breathing space by its creditors to complete the transaction.

The directors believe Fastjet "will have sufficient resources to meet its operational needs until the end of June 2020 subject to forecast revenues not being impacted by any unforeseen circumstances or significant reductions triggered by the COVID-19 virus," the company said.