African budget airline Fastjet has warned that it could go bust unless it secures new funding, knocking more than two-thirds off the value of its shares in a matter of hours.
The company said that as of June 18, it had a cash balance of $3.3m (£2.5m) and was talking to its major shareholders regarding a potential equity fundraising.
“Whilst initial discussions with certain shareholders have been positive, discussions are ongoing and there can be no guarantee of a successful outcome,” it warned on Wednesday.
If no new funds emerge, Fastjet said it might not be “able to continue trading as a going concern” and could be suspended from trading on London’s Aim market.
Shares in the firm plunged 68.06pc on Wednesday to 4.95p.
The airline, which is backed by easyJet founder Sir Stelios Haji-Ioannou, was founded in 2012 and offers flights in countries including Tanzania, Mozambique and Zimbabwe.
Fastjet has suffered several years of turbulent trading: in 2016 it was hit by a shareholder uprising after reporting a £25m loss for the previous year. Sir Stelios subsequently successfully launched a rebellion to remove boss Ed Winter, while chairman Colin Child also stepped down little more than a year after taking the post, admitting that the carrier needed more cash.
Last January it tapped investors for $28m after successfully placing 143m new shares, and earlier this month it announced it had secured a $2m loan from third party investors, but the company is still struggling to continue trading.
The company is due to hold its annual general meeting on Friday, where it will vote on the latest plans to raise money.
Sir Stelios said on Wednesday that he was “very disappointed” at the latest news.
“I have been increasingly concerned over the last few years at the way Fastjet was being run – first by Ed Winter and his team and now by Nico Bezuidenhout,” he said.
“This prompted me on several occasions to indicate my concerns about the company’s management and vote my shares accordingly.” He said he planned to vote against the plans at Friday’s meeting.