African low-cost airline fastjet has posted a first half EBIT loss of $24.9 million, with $13.3 million trading losses in its Tanzanian operation.
CEO and Interim Chairman, Ed Winter said that despite the loss, the firm was pleased with its operational performance.
"We are extremely pleased with our operational performance in Tanzania and the endorsement of the fastjet brand by Tanzanian consumers," he said. "In response to our consistently high levels of operational reliability, passengers are rapidly adopting fastjet's low-cost model and booking early in order to pay the lowest prices and allowing us to yield manage to high load factors. We are significantly changing the view of air travel and taking the lead in developing the aviation industry in Tanzania.
"Building on our existing operation and the strong consumer faith in our brand, we are moving ahead with our growth plans and plan very soon to launch our first international route from Dar es Salaam to Johannesburg. We expect to add further international routes over the next few months, including to destinations in Zambia and Malawi. In addition to this, we will be adding a fifth city, Mbeya, to our Tanzanian domestic network from 1st November following completion of the redevelopment of Songwe airport to accommodate modern jet aircraft."
Mr Winter said he expected further improvements in the second half.
"Our performance is expected to considerably improve in the second half of 2013 with yields having grown from $42 to $81 between January and June. As our planned network expansion progresses and scale covers fixed operating costs, we fully expect fastjet Tanzania to become profitable. Once Tanzania is fully established and profitable we will turn our attention again to the South African market. Regional routes from South Africa to Sub-Saharan destinations lack effective competition and are both underserved and overpriced and ready for an alternative to the cosy relationship between South African Airways and the respective national carrier of each country. It can cost the same amount to fly direct between two Southern African cities on a flight of 3-6 hours as it does to fly to Europe on a 10-12 hour flight.
"Based on our success in Tanzania to date, fastjet is confident in the potential of its long-term strategy to become the pan-African low cost airline of choice."
He attributed most of the losses fastjet suffered to the inherited Fly540 operation which he said had "not performed as expected".
Image: © Thinkstock
Copyright is owned by Africa Outlook and/or Outlook Publishing. All rights reserved.