Budget airline Fastjet loses two thirds of its value after revealing cash crisis

Company will attempt fundraising but warned there is 'no guarantee of a successful outcome'

Shares in budget airline Fastjet plunged by more than 70 per cent in early trading on Wednesday after it revealed it is on the edge of collapse.

The decline in the stock puts the firm’s value at less than £30m.

The company said that as of 18 June, it had a cash balance of $3.3m (£2.5m).

Fastjet said it is “currently in active discussions with its major shareholders regarding a potential equity fundraising”, but warned that it an agreement cannot be reached “the group is at risk of not being able to continue trading as a going concern”.

“Whilst initial discussions with certain shareholders have been positive, discussions are ongoing and there can be no guarantee of a successful outcome,” the airline said in a statement to the London Stock Exchange.

“It is expected that any equity fundraise will be concluded in conjunction with the announcement of the company's annual results for the year ended 31 December 2017.

“If the fundraise is not successful it will result in the annual results not being published and the company being suspended from trading on AIM.”

Fastjet was founded in 2012, and operates flights on low-cost routes across southern and eastern Africa, claiming to “follow in the footsteps of Easyjet”.

In 2016, the airline became embroiled in a war of words with Easyjet founder Sir Stelios Haji-Ioannou, who was a major shareholder in Fastjet, after he said the company was close to going bust.

Sir Stelios said on Wednesday: “Naturally I am very disappointed at this news. It had been my hope to see safe, low-cost air travel thrive in Africa – as elsewhere.

“However I have been increasingly concerned over the last few years at the way Fastjet was being run – first by Ed Winter and his team and now by Nico Bezuidenhout.

“This prompted me on several occasions to indicate my concerns about the company’s management and vote my shares accordingly. If Friday’s AGM goes ahead I will ensure my representatives continue to voice my strong objections and vote against the tabled resolutions.”