Tanzania's low-cost airline, Fastjet, declared insolvent, dims revival hope

Dar es Salaam. The final hammer may have fallen on low-cost airline, Fastjet, following appointment of a liquidator to wind up its business in Tanzania.

The move could render stillborn the application for a new operating licence for the airline due for hearing next week.

The commercial division of the High Court sitting in Dar es Salaam has declared Fastjet Airlines Limited insolvent, dimming hope of a return to the sky of the once popular airline operator.

In its ruling, the court ordered that Fastjet Limited with certificate of registration number 65799 pursuant to section 279 (1) (d) and (e) of the companies Act, be wound up for being insolvent and unable to pay its debts.

The case against Fastjet was filed in the court by Swissport Tanzania which was claiming about Sh2.02 billion in debt from the company for offering ground handling services. Swissport chief executive officer Mrisho Yassin noted that Fastjet owed them Sh1.6 billion and $183,000 before it was grounded.

A media notice on Thursday revealed Mr Biseko Nyagabona of SBN Attorneys has been appointed the official liquidator.

Liquidation is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.

Yesterday, Tanzania Civil Aviation Authority (TCAA) director general Hamza Johari told The Citizen that putting the airline under liquidation disqualified it from getting a new operating license. The airline has been fighting for the licence since January this year. It was grounded in December 2018 after operational glitches and mounting debts.

TCAA’s Licensing Board shall be holding a meeting next Wednesday to review the applications for air and ground handling services licenses from several companies.

“During the board meeting we only consider applications by the existing companies registered by Brela (Business Registrations and Licensing Agency).” Mr Johari told The Citizen over the phone.

He asked: “How can we give a license to a company which is under liquidation?”

After Fastjet’s operating license ceased on January 3 this year, several creditors rushed in attempts to secure their money, including employees who have not been paid to date.

“Even when we opted for arbitration process they did not honor it as they were not turning up,” said Mr Yassin of Swissport’s efforts to obtain payment.

“We had to ask for a winding up petition, a plea which has been fruitful through court. As of now we are working to execute the winding up petition, to recover our money.”

Other creditors of Fastjet have been advised to file their claims with the liquidator on or before November 29. “The creditors meeting shall be held on December 2 at the Kisenga Halls, Millennium Towers between 10 am and 2pm,” a statement by the liquidator said.

The Fastjet’s executive chairman and majority shareholder, Mr Lawrence Masha, was not available for comment yesterday as his phone went unanswered.

The airline’s turbulence worsened in January when the validity of its licence expired after it failed to meet the air transport regulator’s standards, including payment of licence fees and the relatively huge debt it owed TCAA.

Five months ago, hopes for Fastjet’s come back were revived after the troubled airline paid some Sh7 billion as part of the debt it owed TCAA, other service providers and assorted creditors.