Reuters

London

A phone call from budget airline pioneer Stelios Haji-Ioannou, a little Internet research and less than three years later fastjet has targeted $500mn in annual revenue from a 24-aircraft business across eastern and southern Africa by 2018.

“Stelios gave me a call. We spent an afternoon Googling Africa, African aviation, African economics,” fastjet Chief Executive Ed Winter told Reuters.

Now fastjet is seeking to replicate in Africa the model of Haji-Ioannou’s other airline project, easyJet.

Haji-Ioannou, more commonly known as Stelios, founded low-cost carrier easyJet in 1995 but quit the board in 2010 after a row over strategy.

It was there that he met Winter, who was easyJet’s chief operating officer before leaving in 2006.

With just three aircraft, fastjet is currently a loss-making minnow listed on London’s junior market with a capitalisation of 31mn pounds ($52.2mn).

Underpinning confidence in its expansion plans, however, is the success of its Tanzania operations, which Winters expects to become cash-generative in the near future, having taken its maiden flight in 2012.

“We’ve actually managed to prove the low-cost model works in Africa,” said Winters, who owns 2.5% of the company.

“We’ve managed to stimulate the market, we’ve pushed the yield up to where it needs to be and the one thing we now need to do is utilise our aircraft a little bit harder.”

Doing that will involve more routes to Kenya this year and establishing bases in that country as well as South Africa and Zambia.

To fund it, the company has raised 11mn pounds from a placing plus a possible 4mn pounds from an open offer.

Stelios’s vehicle easyGroup participated in the placing, investing 1mn pounds to become fastjet’s biggest shareholder with more than 11%.

“Stelios doesn’t very often put money into his businesses ... and to switch out of his management fee into shares, it shows a lot of confidence in the business,” said Winter, whose son works as a pilot for easyJet.

Stelios has about a 36% stake in easyJet. He frequently disagrees with the airline over issues such as fleet expansion, executive pay and dividend policy.

Steering clear of easyJet’s distinctive orange, fastjet, a name Winters says Stelios came up with, has opted for grey and yellow branding inspired by the African grey parrot.

Mobile phones, payments via sim cards and social media encouraging new passengers - many of them first-time flyers who would previously have travelled by bus - have helped fastjet to generate ticket sales in Tanzania.