LONDON (Alliance News) - African low-cost airline fastjet PLC said Wednesday it has signed a deal to dispose of its holding in Fly Kenya 540, removing the company from the fastjet group.
Fly 540 Kenya is the loss-making investment fastjet inherited as part of the acquisition from Lonrho Aviation. fastjet said it is selling the company to Don Smith, a director of Fly 540 Kenya, for a nominal fee.
Following the disposal, the company said all legal and financial ties between the two companies have been dissolved and each group has indemnified one another against any and all liabilities relating to the segregation of the businesses.
"After a thorough and lengthy evaluation of Fly 540 Kenya, we concluded that converting the business into the fastjet low-cost model would not be economically viable," said Ed Winter, Interim Chairman and Chief Executive of fastjet.
"Disposing of our investment in Fly 540 Kenya allows us to pursue our priority objective of creating fastjet Kenya as a new entity which will operate to the same low-cost model, international standards of safety, reliability and punctuality as fastjet Tanzania and utilise the same commercial strategy and distribution platforms," added Winter.
Most of the investment in Fly 540 has already been written down, said the company, and the remaining USD10 million will be written down in the full-year 2013 accounts. The disposal, which is for a nominal sum, is a related party transaction under the AIM Rules as it is a disposal to a director of Fly 540 Kenya.
No financial terms of the deal were disclosed.
Shares in fastjet were trading 1.82% higher at 1.68 pence per share Wednesday morning.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.
