Category Archives: Five Forty Aviation

Fastjet to enter the South African market via Federal Airlines, drops its fight with Don Smith of Five Forty Aviation

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.

Fastjet South Africa Coming Soon Ad

 

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Fastjet and Five Forty Aviation continue their public dispute over ownership and the use of the Fly540 brand

Fastjet (Dar es Salaam) and Five Forty Aviation (Fly540) (Nairobi) continue to trade statements in their on-going very public dispute. Yesterday (February 7) Fastjet issued this statement for their side of the dispute:

Fastjet logo

“In response to recent misleading press reports, David Lenigas, Chairman of Fastjet plc and Chairman of Five Forty Aviation Limited (Kenya) (“Fly540 Kenya”), confirms that there is no valid Brand Licence Agreements, Franchise Agreements or Management Agreements between Fly540 Kenya and Fastjet or any other Fly540 associated companies in Africa.

Statements made by Don Smith from Kenya, a director of Fly540 Kenya, suggesting he has the right to withdraw the brand are absolutely wrong and without foundation. The Board of Directors of Fly540 Kenya has never met to even consider this issue.

Fastjet wishes to advise the media and our passengers who fly with us throughout Africa in either a Fastjet plane, Fly540 plane or Fly540 Africa plane, that we are looking forward to expanding our low cost airline throughout the African Continent.”

Five Forty Aviation has responded back with their counter argument of the facts:

Fly540 logo

“Five Forty Aviation Limited (“Five Forty Aviation” or “the Company”) provides the following update to correct the factual inaccuracies contained in the statement issued by FastJet on February 7, 2013.

Rights to Fly540 brand

The Company asserts that licencing agreements exist between Five Forty Aviation Limited and FastJet’s Africa Operations: Fly 540 Angola – Sociedade de Aviação Civil SARL (“Fly540 Angola”), 540 Ghana Limited (“Fly540 Ghana”) and Fly540 (T) Limited (“Fly540 Tanzania”), and that these agreements are in writing and are evidenced in various confirmed financial statements. Lonrho Aviation (BVI) Ltd cannot produce written proof that it has held the sole and exclusive rights to the Fly540 brand, and its claim to have held these rights “for a number of years” is a complete falsehood.

FastJet’s Africa Operations, previously Lonrho Aviation (BVI) Ltd, have been licencing the Fly540 brand from Five Forty Aviation since 2008. FastJet’s Africa Operations now fly three Fly540 branded planes in Angola and two in Ghana. It flew two planes using the Fly540 brand in Tanzania until November 2012.

Control of Five Forty Aviation Limited

The latest returns from the Registrar of Companies in Nairobi, as supplied by Anjarwalla and Khanna, the lawyers acting on behalf of Fastjet, on January 30, 2013, show that the shareholders of Five Forty Aviation Limited comprise 530 Investments Ltd (the investment vehicle of Don E. Smith), owning 1,999 shares (representing 51% of the Company), and Lonrho Africa (holdings) Limited, owning 1,923 shares (representing 49% of the Company).

Fastjet’s statement is incorrect in claiming that it acquired Five Forty Aviation through its acquisition of Lonrho Aviation (BVI) Ltd. Interested parties are invited to read Fastjet’s listing document (available from Fastjet’s website), which clearly states that it was to acquire only a 99% economic interest in Five Forty Aviation. It was never to acquire control of Five Forty Aviation.

As all the conditions of the acquisition were not met, Fastjet did not gain a 99% economic interest in the Company. Five Forty Aviation remains majority owned by 530 Investments Ltd and maintains its independence from FastJet. Copies of all licence agreements and returns of the Registrar of Companies in Nairobi are available on request.”