African airline Fastjet’s (FJET) second cash call in only four months has frustrated investors and has prompted the resignation of chairman Colin Child.
The downbeat trading update has resulted in the stock falling 10.6% to 14.3p as investors scrabble to sell.
Fastjet says it has made good progress in executing its turnaround plan, but warns extra costs relating to the return of leased aircraft are bigger than expected, placing a greater strain on its cash resources.
This isn’t the first time the company has had financial problems. In June, it reported lower-than-expected passenger numbers and cashflow issues.
It is expecting to cut costs of $8m by reducing fixed operating costs and overheads by 25% year-on-year by the first quarter of 2017.
Fastjet expects to raise extra funds over the same period and is assessing its route network and frequency to match supply and demand.
It is also restructuring its workforce and relocating its head office from London to Johannesburg, a move which the company hopes will lead to a 35% cost saving.
