Fastjet (Fastjet.com) (Dar es Salaam), Africa’s low-cost airline, has announced the signing of a Memorandum of Understanding (MOU) with local South African investment company Blockbuster, with the objective of Fastjet operating services in South Africa by the end of May 2013.
Blockbuster is associated with a number of high profile South Africans including, Mr Edward Zuma and Mr Yusuf Kajee. It is anticipated that the new entity will be 75% owned by Blockbuster, in compliance with South African law, and 25% owned by Fastjet. Tickets could go on sale within a few weeks and Fastjet is targeting May 31 to launch the initial Johannesburg to Cape Town route.
A commercial arrangement has been struck between Blockbuster and local operator Federal Airlines, a company with a 20 year history in South Africa, which will allow Fastjet to leverage Federal Airlines’ existing licensing infrastructure and deliver its low-cost airline model to the South African public.
In recent months, Fastjet has been in discussions with a number of South Africa-based entities to support its market entry strategy, including negotiations regarding a potential purchase of liquidated airline 1time. In the opinion of the Directors, the value of the 1time has diminished over time.As there is still no indication that 1time creditors will accept the Fastjet offer, the Company has therefore chosen to invest in the Blockbuster/Federal Airlines venture to pursue its entry into an important African market and a country well-suited to Fastjet’s low-cost operating model
Fastjet is also pleased to announce that it has raised additional working capital to assist with the South Africa launch though a successful placing with an institutional investor who is committed to low cost air travel in Africa.
The Company has received legally binding commitments to raise £2,000,000 by way of the issue of 160 million new ordinary shares (the “Placing Shares”) at a price of 1.25 pence per share (the “Placing Price”). These shares will rank pari passu in all respects with existing ordinary shares of fastjet. Following completion of the Placing the Company will announce the issue of the Placing Shares and the date of their admission to AIM, expected by 1 May 2013. The Placing Shares carry one attaching warrant for every two allocated Placing Shares subscribed, with each warrant entitling the holder to subscribe for one ordinary share in the Company at the Placing Price with an exercise period of one month.
In South Africa, the airline intends to initially operate flights along the Johannesburg – Cape Town route twice a day, seven days a week in the prime business travel morning and afternoon slots. Flights to other key destinations will be launched once the Cape Town route is established.”
Earlier this week, Fastjet announced the signing of a MOU with Don Smith, CEO of Five Forty Aviation Limited which trades in Kenya as Fly 540 to resolve issues that have concerned the media in particular. The signing of this MOU provides a positive platform for Fastjet to strengthen its East African hub.
The MOU includes, among other provisions, an agreement by both parties to stop legal proceedings in order that mutually beneficial and constructive resolutions are discussed and implemented.
Fastjet plc is the holding company for African airline Fly540, which operates in Tanzania, Kenya, Ghana and Angola. Flights under the Fastjet brand commenced in Tanzania in November 2012. The airline has introduced Airbus A319s into its fleet and by adhering to international standards of safety, quality, security and reliability, Fastjet has brought a new flying experience to the African market at unprecedented low prices . Fastjet is implementing the low-cost model across Africa and its long-term strategy is to become the continent’s first low-cost, pan-African airline.
Copyright Photo: Duncan Kirk. Airbus A319-112 5H-FJC (msn 1145) of Fastjet is pictured parked at Lusaka.