The Reserve Bank of Zimbabwe (RBZ) has allowed Fastjet Zimbabwe (FN, Harare International) to draw an undisclosed amount from blocked funds in local currency to help settle its debts, which stood at USD21.7 million on December 31, 2021.
In a statement of financial results for the six months to June 30, 2022, the airline said it was awaiting the final position from the RBZ on the next steps to delete balances under the legacy loans, as new legislation was being drafted to govern this. "There is no guarantee of continued future access to the legacy loan facility, despite recent successes in accessing these," the airline said.
Blocked funds or legacy debts constitute debts/funds that Zimbabwean companies incurred from foreign entities for goods, services, and dividends and could not pay due to a shortage of foreign currency.
Fastjet received permission from the RBZ in 2020 to include as legacy loans historic intercompany loans of USD22.5 million and USD2.7 million in funds from company creditors in Zimbabwe.
The legacy loan balance forms part of the total group intercompany loan funding to Fastjet Zimbabwe since it started operations. The RBZ approval was seen as recognition that the loans were made under the previous 1:1 currency regime towards investment and continued support of Fastjet's operations in Zimbabwe.
Following a multi-currency regime since November 2008, the RBZ in February 2019 issued a Monetary Policy Statement that stopped recognising the USD/ZWD exchange rate of 1:1. In doing so, the local currency was effectively devalued. To mitigate the effects of the devaluation and foreign obligations under the previous rate, the RBZ advised the market that foreign liabilities and legacy debts were to be treated separately after registering such transactions with the Exchange Control division of the RBZ.
Meanwhile, Fastjet Zimbabwe grew its revenue by 116% to USD18.4 million in the first six months of 2022 compared to USD8.5 million in the corresponding period in 2021, citing as the reason a growth in passenger numbers.
Operating expenses stood at USD18.2 million compared to USD11.7 million in 2021, as more flights were operated. The primary item driving the cost increase was fuel.
According to the ch-aviation fleets module, Fastjet operates four 50-seater E145s on domestic routes from Harare International to Victoria Falls and Bulawayo, and across the border to Johannesburg O.R. Tambo in South Africa. Other regional routes include Victoria Falls to Maun in Botswana and Nelspruit (new name Mbombela) in South Africa.
