Fastjet’s chief executive Ed Winter is to become the second Fastjet board member to resign, following director Krista Bates’ departure, after a public campaign by majority shareholder Sir Stelios Haji-Ioannou to oust him.
Mr Winter, had originally planned to leave the Tanzanian-based carrier later in the year, but according to reports in the UK press, he will now quit on Friday.
However, the low cost carrier, which started flights to Nairobi recently, remains in financial trouble.
A week ago, Fastjet warned that it “no longer expects to be cash flow positive” for the year and that its 2016 results would fall short of forecasts. The firm’s Aim-listed shares fell 36 per cent, prompting Sir Stelios to call for a shareholder meeting where he immediately called for the removal of Mr Winter and Ms Bates, saying he had “lost faith in the management and current board”.
Sir Stelios criticised “the ridiculous overhead cost in the company”, which in part have been caused by basing its head office at Gatwick Airport.
“This is not only a high-cost location, when revenues are reported in local Tanzanian currency, but is also 4,750 miles away from Tanzania where the main operations and customers of Fastjet are located.” – Sir Stelios Haji-Ioannou
Sir Stelios, who founded Easyjet in the 1990s and helped set up Fastjet four years ago, has now called upon executive chairman Colin Child to cut overhead costs before the company runs out of money.
In a letter to Fastjet’s chairman, Sir Stelios said that not only did Fastjet have a “ridiculously high-cost base” but said Mr Winter “has burnt some £80m in the last three years”, adding that Fastjet was making unrealistic revenue forecasts for a fleet of six aircraft.
Speaking to the Guardian, Sir Stelios said: “We believe the company will run out of cash some time in 2016. We now have about six months left to steady this ship. Time is of the essence.”
Sir Stelios’ easyGroup holding company, controls 12.6 per cent of Fastjet, but since taking over Tanzanian operator Fly540 in 2012, the carrier has suffered to establish itself as a pan-African budget carrier.
Fastjet launched in 2012 with domestic flights in Tanzania, and aimed to become a pan-African budget carrier.
Despite expanding its operations into Kenya, South Africa, Zimbabwe, Zambia, Uganda and Malawi, a profit warning last December saw shares fall to a record low.