Chemring Sting: Military Leadership For A Defence Contractor With Its Guard Down

A British defence company with over a hundred years of history, however, since 2011 Chemring has seen its share price contract 68% and with Mark Papworth being sacked as CEO for presiding over a failed turnaround of the company; Chemring has turned to an ex-military man, Michael Flowers, to bring the company into line and make the stock stand to attention.

I believe the company can see an actual turnaround under Michael Flowers’ command, and there is evidence to support this hypothesis.


fastjet: easyjet’s little African brother


So what exactly is fastjet and what are its links to easyJet? Well, they are actually both companies under the easyGroup holding company; fastjet is the only company in easyGroup which does not bear the “easy” brand! Hopefully, this little penny-stock’s mere association with the successful easyGroup is enough to lend it some credibility from the off! That said, not all easyGroup ventures have been unequivocal successes like the synonymous easyJet (easy4Men anyone?….)

The basic premise of fastjet is to take what has been successful in Europe, the low-cost carrier business model so strongly associated with easyJet, and attempt to replicate this in the African market. Clearly these are very different business environments but with a burgeoning middle-class in many African nations it would seem viable that air travel will become an affordable option. It has been the case in Africa for the majority of people living there that they must travel between cities via buses and cars, however, this is extremely illogical given the poor state of much of the African infrastructure and sheer distance between greatly separated cities.

It is often the case that when people mention company and Africa in the same breath that a sense of fear, and no doubt high risk, flood your mind. Therefore, it may ease your mind to know that, although fastjet does operate in Africa and this brings with it associated risk, the actual company is British and operates out of none other than Gatwick Airport. In fact, the CEO (Ed Winters) is the former easyJet Chief Operating Officer and a former pilot with BOAC. It has to be highlighted that Mr easyJet himself (Sir Stelios Haji-Ioannou) is the co-founder. If this clear pedigree in top figures at fastjet isn’t enough, Stelios and easyGroup scrapped a proposed management consultancy fee in favour of more fastjet shares!

Down 96%


fastjet shares since August 2012 on London Stock Exchange’s AIM (Alternative Investment Market) have been down ~96%; the shares have been landing rather than taking-off! It may have had a poor start but I don’t think this should surprise anyone, airlines are notoriously capital intensive to start with which has led to fastjet diluting the shares on multiple occasions in a bid to raise extra capital. Since its inception, fastjet has not been able to turn a profit. Much like any growth company, fastjet has had a far greater focus on: expanding what’s profitable and consolidating its loss-making operations.

The loss-making operations have been mainly due to a tumultuous acquisition of Fly540 stock – assuming their operations in Tanzania, Angola, and Ghana. Since the acquisition there have been numerous legal issues, to the point where fastjet now treats it’s ownership as an investment. One of the major issues was that Fly540 did not conform to the low-cost carrier model which fastjet wanted to create. It would seem that recently this issue has turned a corner, with fastjet suspending loss-making operations, terminating leases where need be, and restructuring what’s left into the low-cost carrier model.

Strategic Partnership

As of May 2014 it had been announced that Expedia, the world’s largest online travel company, will now provide access to customers across 60 countries to purchase travel arrangements with fastjet via their website. I don’t suppose this is going to cause fastjet bookings to jump astronomically, however, it does provide such a possibility in the future! I suppose in some way this is the establishment of the airline as an international player in the African carrier market – hopefully some rich, middle class teens book some fastjet flights on their iPhones whilst they plan their next humanitarian intervention-cum-holiday!