Fastjet awaits legacy loans legislation

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FASTJET says it is awaiting the Reserve Bank of Zimbabwe’s (RBZ) final position on the next steps to expunge legacy loan balances.
The legacy loans relate to foreign money that local businesses needed to pay external suppliers, but the central bank was unable to provide.
Fastjet received permission from the central bank in 2020 to include as legacy loans certain historic group intercompany loans of US$22,5 million given to Fastjet Zimbabwe Limited, as well as US$2,7 million in funds from company creditors in Zimbabwe as blocked creditor funds.
The RBZ has approved the company’s request to draw funds from the legacy loan in Zim dollar to pay off US$8,7 million to Fastjet Zimbabwe debtors as of December 31, 2022.
As of December 31, 2022, the legacy debt facility had been completely drawn.
“The company is awaiting the final position from the RBZ on the next steps to expunge balances under the legacy loan, as new legislation is being drafted to govern this,” the airline group chief financial officer, Kris Jaganah, said in the company’s annual report for the year ended December 31, 2022.

In Zimbabwe, Jaganah said the Zim dollar has been steadily losing value against the US dollar during the last few years, and this trend has continued into 2022.
Policymakers, however, constantly track this loss of value and modify their policies as necessary.
“The changing policies need active management and should the country at any time not allow airlines to charge tickets in US dollars or access to US dollar liquidity in-country ceases or becomes heavily restricted, this would represent a significant risk to the group,” Jaganah said while commenting on currency risk in Zimbabwe.
Fastjet’s bottom line is back in the black after the airline posted a profit of US$2,9 million for the year ended December 31, 2022, compared to a US$4,3 million loss in 2021. Global economic activity increased in 2022, as Covid-19 containment efforts were gradually reduced and the number of daily new infections trended lower.
Revenue for Fastjet Zimbabwe for the year rose 121,23 percent to US$50 million from US$22,6 million in the comparative period.
“This is higher than the pre-Covid-19 levels, which was at US$25,2 million for 2019,” Mark Hurst, Fastjet group chief executive officer, said in the company’s annual report.
“Johannesburg-Victoria Falls route contributed significantly to this increase in revenue with Fastjet Zimbabwe having almost three frequencies daily during peak periods, where it was the only carrier operating on this route for a significant part of the year.”
During the period, the airline also introduced routes from Kruger, Mpumalanga, to Victoria Falls and from Maun, Botswana, to Victoria Falls, expanding its selection of leisure routes for the tourist industry.