fastjet already seeing "substantial benefit" from lower oil price

Airline Fastjet (LON:FJET) is already seeing a substantial benefit from the slide in oil prices, it said today.

The Africa-focused carrier does not pre-purchase or ‘hedge’ its future fuel price but pays current market rates.

Fastjet’s fleet comprises mostly modern Airbus 319 aircraft, but fuel still represents 40% of direct operating costs.

“As such, the fall in the price of oil delivers a large direct cash benefit to the airline,” it said.

The airline said it buys its fuel through a central buying platform.

This consolidates the requirements of a significant number of small airlines across Africa and generates significant economies of scale for its members.

Fastjet also reported a strong rise in passenger numbers in November and strong forward seat sales into December.

Its Tanzania-based operation carried 63,146 passengers, a 90% over a year ago at a load factor of 77%.

For December, the airline added forward ticket sales were 99% had almost doubled with a 30% jump in average yield over the comparable month.

Additional flights on certain routes have been scheduled to maximise revenue opportunities for the month. These extra flights are selling well, it said.

Ed Winter, chief executive said, "We are very pleased with our trading position in Tanzania.

November results are strong as we maximise our market leading position in the country. December is a critical month and the early signs are very positive."

“With fuel representing around 40% of our operating costs and oil prices forecast to remain at these low levels through early 2015, Fastjet is directly benefitting from the reduced oil price.”