Fastjet to scale down jets, move HQ to save
That will be initially through short term wet leases (aircraft, crew, maintenance and insurance), to be superseded by dry leases (aircraft only) in the start of H2 2017.
Material progress has been made and two-thirds of the company’s A319 aircrafts have now been removed from fleet and the first wet-leased Embraer e-Jet E190 aircraft was introduced in Tanzania during October 2016.
Based on initial experience with the aircraft the Board remains confident that the original expectations of a 10 – 15% reduction in operating cost will be achieved whilst seat occupancy rates on flights conducted with the E190 has to date showed an 18-percentage point increase and average yields have increased by approximately 12%.
The company has continued the process of assessing its route network and has aggressively rationalised routes and/or reduced frequencies to more sustainably match supply levels with demand.
This process is nearing completion, with rationalisation of flight activities between Tanzania and Kenya, Tanzania and Uganda as well as between Tanzania and Zimbabwe taking effect on 5 December 2016.
Service frequency between Harare, Zimbabwe and Johannesburg, South Africa, has been increased whilst services between Johannesburg and Victoria Falls, Zimbabwe, will be suspended as from next month.
The remaining routes within Zimbabwe and Tanzania, and between these countries and South Africa, are all projected to positively contribute to fixed cost during December 2016 and will continue to be closely monitored thereafter.
The process of relocating the company’s Head Office function from London to Johannesburg has commenced, and is expected to be substantially completed by March 2017, with timings influenced by contracted notice periods and business continuity in critical functions.
In this regards the company expects annualised Head Office cost-savings of c.35% whilst achieving increased responsiveness to Passenger needs, resulting from being in closer proximity to the company’s operating markets. ■