Image copyright Fastjet

Shares in African budget airline Fastjet collapsed on Wednesday after warning it could go bust unless it obtains new funding.

The airline, set up by easyJet founder Sir Stelios Haji-Ioannou, flies in several African countries including South Africa, Tanzania and Zimbabwe.

It is talking to major shareholders about an equity fundraising.

However, if no new funds emerge, Fastjet said it may not be "able to continue trading as a going concern".

"Whilst initial discussions with certain shareholders have been positive, discussions are ongoing and there can be no guarantee of a successful outcome," the company said.

Fastjet has just $3.3m in cash, of which $1.75m is held in Zimbabwe and is not readily accessible.

Shares fell 72% to 4.25p in afternoon trading in London, valuing the company at less than £20m.

If the talks fail, Fastjet said it could be suspended from trading on the AIM market.

Sir Stelios has been Fastjet's major shareholder but now has a stake of less than 3% in the company.

Two years ago he was involved in a boardroom dispute about leadership at the airline.