24 Apr 2013 07:00
fastjet plc
("fastjet" or the "Company")
24 April 2013
fastjet to enter South African market via South African Partnership and Placing
Johannesburg, 23 April - fastjet, Africa's low-cost airline, today announces 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 the 31st of May 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 Airline's 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.
Commercial Manager of Federal Airlines Mr Brad Dickson commented:
"We look forward to working closely with fastjet and cementing a new relationship in the South African aviation environment."
Commenting on the announcement, fastjet Chief Executive Ed Winter said:
"We believe that the operating agreements in place between Blockbuster and Federal Air represent a great opportunity for fastjet, our local investors, our partners at Federal Air and most importantly, the South African public,"
"Though we have been in talks with a number of companies regarding licensing arrangements, we have ultimately decided that in order to best serve South African customers, we should invest not in the past, but in the future."
"We are now firmly focused on quickly getting up and running in order to create a fresh, unique and commercially sustainable offering which will stimulate the market."
"fastjet sees a strategic gap in the South African marketplace for a pan-continental, low-cost airline operating the yield management model required to keep fares affordable for passengers, not just at launch, but also in the long term."
David Lenigas, fastjet's Chairman added:
"Air fares in South Africa have skyrocketed since 1time ceased flying at the end of last year, and many planes are operating at full capacity - specifically on the key Johannesburg to Cape Town and Durban routes."
"Today is an incredibly exciting day for fastjet, not just in South Africa, but across the entire continent. As populations grow and disposable income and consumer spending increases, there is greater demand for affordable air travel. We would like to be part of the solution."
"We do not seek to be a hostile competitor in the market place as we fully understand and appreciate the significance of the national carrier and existing airlines in country, but we want to provide extra seat capacity to South Africans so that they can travel when and where they want at better prices."
"fastjet seeks to meet that demand, and we look forward to bringing the people of Africa - the continent's first low-cost, point-to-point, all jet airline, operating to international standards of safety and quality."
"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.
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NOTES TO EDITORS
About fastjet plc
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.
In the year to March 2013, fastjet and its subsidiaries carried almost 800,000 passengers, 50% more than a year previously and 99.2 per cent of its flights left on time with no cancellations. The results of a recent customer satisfaction survey showed that 100% of customers were likely to recommend fastjet to a friend. In developing its strong brand and identity, fastjet has won and been nominated for a number of awards, including winning three Transform awards for the rebrand and launch of fastjet and a nomination for the prestigious Drum "New Product or Service launch" award.
fastjet plc is quoted on the London Stock Exchange's AIM market.
For more information see www.fastjet.com