The Reserve Bank of Zimbabwe (RBZ) has permitted Fastjet Zimbabwe to draw funds from the legacy loan in local currency in the interim to pay off its creditors.
The legacy loans relate to foreign money that local businesses needed to pay external suppliers but the central bank was unable to do so.
Fastjet received permission from the RBZ 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.
Since Fastjet Zimbabwe initially began operations, a portion of the total group intercompany loan capital has been made up of the Legacy Loan debt.
The RBZ has acknowledged that the loans were made under the previous 1:1 currency regime for investment and to continue support of the company’s operations in Zimbabwe with these licenses.
“While 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,” said Fastjet in a statement accompanying its half year results.
“In the meantime, the RBZ has allowed the company to draw against the Legacy Loan in ZWL currency to settle fastjet Zimbabwe creditors. There is no guarantee of continued future access to the legacy loan facility, despite recent successes in accessing these to date.”
In the first six months of 2022, fastjet Zimbabwe Limited increased revenue by 116% to US$18.4 million from US$8.5 million in H1 2021 due to growth in passenger numbers.
fastjet Zimbabwe’s operating expenses stood at US$18.2 million compared to US$11.7 million in 2021, driven by flight operations during this period being higher than pre-Covid-19 levels.
It said the major item driving the increase in costs is fuel, both in litres consumed and the price paid per litre.
Fastjet Zimbabwe’s load factor reached 78% while network on-time performance stood at 91%.
The airline operates four Embraer ERJ145, 50-seat jets, servicing all domestic Zimbabwean routes as well as the international core cross-border routes between Zimbabwe and South Africa – Harare