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Fastjet shows early signs of profitability

December 2014 was Fastjet Tanzania’s first profitable trading month according to a report released by the airline today. Revenues, load factors and total number of passengers are also on the rise.

Passengers disembark from a Fastjet A319 in Tanzania.

Passengers disembark from a Fastjet A319 in Tanzania.

Today’s announcement is great news for Fastjet shareholders. This is the first time since scheduled flights began in November 2012 that Fastjet has announced a profit.

The Fastjet statement says that profits recorded in December were at Earnings before Interest and Tax (‘EBIT’) level. The strong performance was attributed to a very busy holiday season combined with declining prices for fuel.

“The Tanzanian fleet of three aircraft is now producing more than double the monthly revenue compared to a year ago,” says Ed Winter, Interim Chairman and Chief Executive Officer at Fastjet. “This higher utilisation, combined with higher per passenger revenues and lower fuel prices, has been transformational for the business.”

Fastjet operations in Tanzania carried 65,653 passengers in December 2014, a 75 percent increase compared to the same month in 2013. Load factor was 76 percent, 2 percentage points up compared to a year before.

The fuel price in January is expected to provide a further 13 percent reduction on December prices.  The airline is hoping for more reductions in February and March as the recent falls in the price of crude oil continue to flow through to African aviation fuel supplies. Fastjet does not ‘hedge’ its future fuel price but pays current market rates for fuel and is therefore realising substantial benefits from the reduction in the cost of crude oil.

Meanwhile, Fastjet has temporarily cut capacity to match reduced demand now that the holidays are over. One of the company’s three Airbus A319 aircraft, 5H-FJD, has been withdrawn from service to undergo maintenance and get a fresh coat of paint.

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