FastJet to cut routes as cash shrinks, sending stock falling

FastJet will start closing routes after burning through cash in its efforts to become the first pan-African discount airline, predicting 2016 earnings will fall “materially” below analyst estimates. The share price almost halved in the biggest decline since the company was founded in 2012. The impact of challenging market conditions and currency fluctuations has proved “a lot more prolonged” than forecast in December, FastJet said Monday. It plans to respond by paring capacity and making unspecified network cuts to better match demand. FastJet CEO Ed Winter has said he’s seeking a successor amid pressure to leave from shareholder Stelios Haji-Ioannou as the cash situation worsens. While the company said it can meet operational needs, with $20m available at the end of February, the board may consider raising further funds this year to provide “additional headroom.” Shares of FastJet fell 30.75 pence, or 46%, to 36.50 pence, the most since the company was founded in a reverse takeover involving miner Lonrho’s Fly540 airline arm, before trading 35% lower at 11:49 a.m. Stelios, the EasyJet founder who goes by his first name and owns 13% of FastJet, said that the African carrier is suffering from “a bloated cost base created by Ed Winter and his staff.” The entrepreneur said the CEO should now go and leave Chairman Colin Child, who joined in October and was previously finance director of De La Rue Plc, to begin making cuts.<br/>