Beleaguered African airline Fastjet (FJET:AIM) has suffered yet another blow after revealing lower-than-expected passenger numbers and continuing cashflow problems.

The £19 million cap, which is backed by EasyJet (EZJ) founder Sir Stelios Haji-Ioannou, says the operating environment in the first half of the year has continued to be challenging.

Despite a cost reduction programme and a decrease in routes and fleet size, the no-frills airline continues to be cashflow negative.

It says it needs to raise further finance to provide essential working capital, further reduce costs and make changes to its operations. Unsurprisingly, investors aren’t too pleased, with the shares slumping 11.4% to 25.3p.

FASTJET - Comparison Line Chart (Rebased to first)

Fastjet is launching a fundraising exercise which it plans to complete next month. Soon-to-be chief executive Nico Bezuidenhout, who joins the company on 1 August, has identified opportunities to stabilise the business, including a review of the size and type of aircraft operated, routes flown and the relocation of its head office to Africa.

It won’t be an easy task. Fastjet issued a profit warning in March – shortly after Sir Stelios said he had lost faith in the board and warned the company was running out of money. He called for the dismissal of then CEO Ed Winter and board director Krista Bates.

Fastjet hoped to be Africa’s version of EasyJet or Ryanair (RYA) but has been hurt by the weakness of many African currencies and its delay in setting up hubs in countries like Zimbabwe and Zambia.

Back in 2013, auditors KPMG said there were significant doubts about Fastjet’s prospects and its ability to continue as a going concern.

Shares in the airline have crashed 75.5% over the past 12 months. Turning the business around will be an uphill struggle.

Issue Date: 28 Jun 2016