CANTANKEROUS STELIOS PUT IN HIS PLACE AS MOTION TO UNSEAT FASTJET CHAIRMAN GETS THROWN OUT
(Posted 29th June 2016)
Stelios Haji-Ioannou, one of Fastjet’s shareholders with holdings in the 11 percent region, has proven to be as difficult a character to deal with for Fastjet’s management and board as he was previously for the EasyJet management and board after he had yielded control of one of Europe’s leading LCC’s.
His attempt at the just concluded general meeting of the company to get Fastjet Chairman Colin Child dismissed backfired at him, after Child remained in the chair while the airline prepares for the arrival of its new CEO Nico Bezuidenhout.
Stelios had been meddling in company affairs for too long now, according to a usually well informed source, most notably when he earlier this year launched an attack on former CEO Ed Winter and the company’s general counsel, after Ed had already announced his resignation from the company and said that SHI needed to be put in his place.
Results announced at the general meeting were mixed, and while passenger numbers rose growth was lower than anticipated due to the challenging business environment in the airline’s core market Tanzania. Loadfactors most notably dropped as a result of capacity increases and the new CEO will no doubt already be burning midnight oil figuring out a way forward before he officially joins Fastjet on August 01st.
Given the entry into the Kenyan market, expected to happen during H2 of 2016 with no concrete dates given as yet, the airline is presently undergoing the KCAA process of attaining an AOC. Hard decisions will need to be taken by Fastjet’s management in regard of its future fleet with a particular eye on the Kenyan market. Some of the Kenyan routes given to Fastjet do not have sufficient traffic to justify the deployment of the airline’s choice of aircraft, an Airbus A319, namely the city of Kisumu and the town of Eldoret.
Even Kenya’s own LCC Jambojet, had to find out at their expense that the use of a Boeing B737-300 failed to achieve a black bottom line, even after combining the two destinations for some time. Now, Jambojet has changed course and is deploying Bombardier Q400NextGen turboprops with 78 seats on the routes (also serving the coastal destinations of Lamu, Malindi and Ukunda), with each destination being served on its own.
Initial plans by Fastjet some years ago were to use CRJ200 aircraft in Kenya, but after the ‘marriage‘ with Kenya’s Fly540 spectacularly failed is it now anyone’s guess if Fastjet on entry will use an A319 or else consider different and maybe smaller jets which are easier to fill up. Should such a fleet change become reality, the A319’s could all go back to the lessors in favour of a smaller jet type as LCC’s do not ordinarily operate with different aircraft types, Jambojet of Kenya excluded.
Loadfactors according to information sources declined from the 70 percent margin during the last financial year to slightly under 50 percent for the just concluded financial year. Given the average fare levels achieved this too will be subject to a full review of how to both restore loadfactors or else put less seats on the market through a potential fleet change across the board.
Chairman Colin Child, after surviving Stelios’ ouster attempt, acknowledged the difficult business environment but also expressed his confidence that the fundamentals were in place to further reduce operational losses and move towards a positive balance sheet over the next few years.
A fresh cash call is likely to be made to shareholders before Bezuidenhout joins Fastjet and a change in direction vis a vis the continued use of the A319 may be the first step the new CEO will take, apart from looking at other areas where operations can be streamlined and savings accomplished.
Another major change coming up maybe when answering the question of where the airline should be headquartered. Fastjet PLC is presently based in London while the two operational units Fastjet Tanzania and Fastjet Zimbabwe are thousands of miles away in Africa with ongoing efforts to bring both Kenya and Zambia on line this year.
No doubt will this be a goldmine for aviation pundits and analysts in coming months who will watch closely which major decisions and perhaps revisions Nico Bezuidenhout will take in conjunction with the board of directors after he formally takes charge in just over a month’s time.