Fastjet Group has deferred the launch of Fastjet South Africa (7V, Johannesburg O.R. Tambo) despite having taken formal control of Federal Air (7V, Durban Virginia) in October last year.

The South Africa-based holding said in an LSE filing that plans to launch Fastjet-branded operations in South Africa have now been pushed back to 2020 from the previously announced 2019.

However, ahead of that development, Federal Air has now added one E145 to its operations specifications. This Embraer Regional Jet will then be wet-leased to the group's Fastjet Zimbabwe (FN, Harare Int'l) subsidiary with effect from July 2019 onwards.

"This allows FedAir to gain its own operational expertise on the ERJ145 fleet and further replaces any long-term support from Solenta Aviation (SET, Lanseria) on additional aircraft and crew supply," it said.

Given the Zimbabwean government's decision to introduce a new virtual currency, the RTGS dollar, back in January and its immediate devaluation against the US dollar, Fastjet Group has had to restructure its Zimbabwean cost base in order to save on scarce foreign currency. According to the group, it relocated its passenger call centre support function from Cape Town to Harare during the first quarter of this year.

Additionally, it also restructured its head-office support infrastructure in Johannesburg resulting in a labour cost reduction of approximately 30% year-on-year.

Insofar as its Mozambican operations are concerned, the Group said Ethiopian Mozambique Airlines' market entry coupled with two Category 5 cyclones had had a significant impact on Fastjet Mozambique's bottom line. As such, to bolster the carrier's longevity, Fastjet Mozambique has entered into a commercial partnership with the state-owned LAM - Linhas Aéreas de Moçambique (TM, Maputo) by means of a codesahre agreement covering domestic Mozambican services.

"The Group will continue to closely monitor the loss evolution of our Mozambique operations, both in context of demand (negative economic impact of natural disasters offset by pending gas extraction coming on-stream) and supply (LAM partnership and Ethiopian Airlines' market entry) considerations," it said. "To mitigate future losses in Mozambique, fastjet has scaled back frequency on routes, to reduce overall capacity supply, and additionally aligned the schedules with LAM as mentioned above. The Board expects the trading losses in Mozambique to be far less in the remaining months of the year, compared to the first four months of 2019."

While Federal Air managed to post a net profit after tax of USD1.1 million for the twelve months ending December 2018, the group said its Mozambique start-up losses remained its biggest operational challenge, together with uncertainties regarding Zimbabwe’s currency repatriation abilities and future RTGS devaluation concerns.