Fastjet takes aim at its own auditors

(eTN) – It took just a few hours for FastJet to take aim at their own auditors, KPMG, which in their report for the period of 18 months ending December 31, 2012 painted a bleak picture about the financial status of the UK-based company.

As published in the highly-respected Routes News earlier today, a company spokesperson apparently told them that no matter what the auditors had put in their report, it failed to reflect the true prospects of the airline.

The full text of the Routes News text is published here:

“Bleak conclusions from auditor KPMG are being contested by the aspiring pan-Africa low-cost carrier.

“On Friday, auditor KPMG said there was ‘significant doubt’ the company could continue to trade after the airline lost US$56m (£37m) over the 18 months to December 31, 2012.

“But a spokesperson for the airline told Routes News that the results fail to reflect the carrier’s true prospects.

“In its most recent expansion, Fastjet has opened an operation in South Africa, which is set to fly Johannesburg–Cape Town from early July.

“This week, it was also reported that the carrier’s subsidiary, Fly540 Ghana, has secured rights to fly to Nigeria.

“In defense of the airline, the spokesperson told Routes News that Fastjet had only started flying a month before the close of the audit period at year-end.

“Therefore, the results are extremely historic and not relevant to the performance of fastjet, said the spokesperson.

“The losses are attributed to Fly540, where the Fastjet board has had to make significant impairments to goodwill and assets acquired. The board is taking action to improve Fly540 performance whilst services continue under that brand.

“Fastjet carried almost 800,000 passengers in the year to March 2012, a 50% rise on 2012, with 99.2% of flights on-time, said the spokesperson.

“Fastjet has also secured £15.7m (US$24.1) to fund expansion and is now Africa’s second most ‘liked’ airline on Facebook, the spokesperson added.”

A Kampala-based top manager with rival audit firm PriceWaterHouseCooper, when consulted on the style and format of the response above, had this to say on condition of anonymity: “I have not seen that report, but one can assume that those accounts were qualified. There is a process to deal with qualified accounts and it is up to the directors of the company, the true custodians of any limited liability company, to sit down and digest such findings.

“If I am to qualify accounts, my team and I have a meeting with the clients to discuss remedies, but it is ultimately the directors who have to face the shareholders in an AGM [Annual General Meeting] and explain how the accounts failed to get a clean bill of health. To have a spokesperson of the company to make public statements of the sort you mailed to me is highly unusual and only muddies the waters even more. Such staff should be put on a tight leash because financiers and banks also read such statements and from what I read, this will not be helping the company to resolve the underlying issues.”