March 1, 2019 / 10:23 AM / a year ago

UPDATE 1-Cash-strapped African airline Fastjet extends loan agreement terms

(Adds details, background on troubles)

March 1 (Reuters) - Cash-strapped low-cost African airline Fastjet Plc said on Friday it had managed to extend the terms of a loan to March 31.

Fastjet in June had entered agreements with Annunaki Investments and SSCG Africa Holdings, following which the airline lent $5 million from its Zimbabwe unit to Annunaki in return for a $2 million loan to Fastjet from SSCG.

The low-cost airline said on Friday that the loan amount from Fastjet Zimbabwe to Annunaki had increased from $5 million to $7 million, after certain currency devaluations.

Fastjet has been facing a multitude of issues mainly relating to its cash balance and has struggled to secure cash through fundraising and equity refinancing to continue operations.

It faced regulatory hurdles after Tanzanian aviation authorities warned of revoking the company’s licence. This prompted Fastjet Airlines Tanzania, a separate entity from the parent, to cancel all flights for over a month in the country.

In early December, Fastjet had warned it may have to go into administration, shut shop or sell itself as it was running on near-empty coffers.

Since then, there has not been talks of this since although it managed to raise some cash.

Fastjet, launched in 2012 and modelled on no-frills airlines such as easyJet Plc and Ryanair Holdings Plc , has been running short of cash for more than two years.

Easyjet founder Stelios Haji-Ioannou helped found Fastjet. (Reporting by Sangameswaran S in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber)

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