Lonrho Regulatory News (LONR)

4 Jun 2008 13:40



4 June 2008

LONRHO PLC

 ("Lonrho" or the "Company")

FLY540 DIVISIONAL UPDATE

Lonrho (AIM: LONR) , the conglomerate with a structured portfolio of African investments, is pleased to announce that substantial progress has been made in the scheduled development of the Company's modern pan-African airline, Fly540. Fly540 currently provides safe international passenger and freight services, in East Africa, with plans to expand across the continent.

Fly540 continues to focus on providing aviation services to the domestic and regional markets within Africa, to the highest international standards, utilising the latest technology and equipment. The Fly540 business model focuses on the use of highly efficient aircraft, (ATR's) and streamlined and cost effective operations aimed at mininmising overheads to establish regional hubs, ahead of developing a full scale Africa wide network, flying east to west and north to south across the continent.

Fly540 Kenya

Since establishing Fly540 in Kenya in 2007, it has successfully developed to become the second largest carrier in Kenya, after the national airline, Kenya Airways, carrying up to 20,000 passengers a month. Hubbed out of Nairobi, and serving all of the main domestic locations, the airline has built a strong reputation for reliability, service and value.

Fly540 Kenya became cash positive in its first year, establishing itself as the premier private passenger airline servicing the domestic market in Kenya. In January 2008, as part of Fly540's pan-African expansion plans the airline moved to its international phase. Fly540 Kenya has now established new routes from Nairobi to Uganda, Somalia, Southern Sudan, and Tanzania. By the end of 2008, it plans to add new services to Zambia, Rwanda and the DRC.

Fly 540 Angola

The second hub being established in the pan-African roll out of Fly540 is in Angola. In October 2007, Lonrho agreed to form a new joint venture in Angola to develop a new domestic airline. The airline, Fly540 Angola, is being developed on the ground, where the Fly540 Angola management team is currently in place, and recruiting and training maintenance staff and cabin crew. The development of ticket and administration offices, hangars and infrastructure necessary for the airline to operate is at an advanced stage and is nearing completion. Two aircraft will be deployed to Luanda in June 2008 and a further four new aircraft deployed by September 2008.

Following the successful Fly540 Kenya model, Fly540 Angola will, as routes build, fly to fifteen domestic locations throughout Angola. Once established as a leading domestic operator, appropriate regional routes to neighbouring countries will follow.

Fly 540 pan-African Expansion Plans

In the second half of 2008, Fly540 will open its third strategic hub, to service West Africa. This will be based in Ghana and service domestic and regional routes. 

In the interim, during the remainder of 2008 and 2009 the airline will develop a series of key subsidiary hubs, which will facilitate both domestic and inter country traffic on a localised basis. Countries at feasibility stage as subsidiary hubs include Zimbabwe; Djibouti; Guinea; South Africa, Mozambique, Algeria and Equatorial Guinea. Each of the localized domestic hubs will be connected with a senior regional hub.

Following the establishment and successful operation of the three senior hubs, Kenya, Angola and Ghana, a regional jet service (Boeing 737-500's) will be established to untie the three hubs and complete the delivery of the Fly540 airline concept.

David Lenigas, Executive Chairman of Lonrho commented: 

"The market opportunity to develop a quality, efficient and international standard pan-African airline is significant, Fly540's success in East Africa to date is testimony to this. We see similar opportunities for Fly540 throughout Africa and are extremely positive about the future growth prospects for the airline. Economic growth in the continent is being limited by of the lack of core infrastructure in place. Fly540 delivers a low cost, reliable solution to travelling around the continent providing huge benefits to local communities and providing a critical means of connecting key African commercial hubs. We believe that Fly540 will continue to develop and support economic growth in Africa, becoming a market leader in the African aviation sector in the medium term."

LONRHO ENQUIRIES

NOTES TO EDITORS

About LONRHO:

Lonrho Plc is an expanding conglomerate that is rapidly growing a successful business throughout Africa. The Company's shares are traded on the London AIM stock exchange (LONR). Lonrho is strategically focused on the development of business opportunities in infrastructure, transportation, support services, hotels and natural resources. The Company has over 19,000 shareholders and substantial institutional backing to support its mandate to build a profitable business that plays a fundamental role in the development of the African economy. 

Since 2006, the Company has invested in or acquired control of: 

Hotel Cardoso - www.hotelcardoso.co.mz  (retained)

Lonrho Mining - www.lonrhomining.com 

Luba Freeport - www.lubafreeport.com 

Fly540 - www.fly540.com 

Swissta Holdings - www.swissta.com 

SA Independent Liner Services - www.saliners.com 

Bytes and Pieces www.bytespieces.com 

Kwikbuild - www.e-kwikbuild.co.za 

LonZim - www.lonzim.co.uk