Africa poised to get Fastjet discount airline

 

AFRICA IS poised to get its first continent-wide discount air services after industrial group Lonrho engaged EasyJet founder Stelios Haji-Ioannou to help transform its aviation arm into a low-cost carrier.

Fastjet will employ operating licenses held by Lonrho’s Fly540 unit to establish flights in Ghana, Kenya, Tanzania and Angola using a fleet of Airbus SAS A319 airliners or Embraer E- 190 regional jets, Ed Winter, who will run its holding company, Rubicon Diversified Investments, said in an interview. A rise in GDP and consumer spending means Africa is ready to support a discount carrier of the kind that has transformed aviation elsewhere, said Winter, who has worked at EasyJet and British Airways.

Like carriers from Southwest Airlines in the US to Malaysia’s AirAsia Bhd, Fastjet aims to create a new market by offering fares low enough to persuade some people to fly for the first time and others to travel more, he said.

The four markets to be targeted by Fastjet all have large-scale oil or gas developments, from which wealth is beginning to trickle down to a growing middle class, the executive said.

Under the plan, Rubicon, an investment shell created from a former software company, will buy Lonrho Aviation, which runs Fly540, in an all-stock deal valuing the unit at $85.7 million. The reverse takeover will give Lonrho 73.7 per cent of shares in Rubicon, which began trading on London’s Alternative Investment Market after a February 23rd suspension pending the takeover talks.

Lonrho rose as much as 9.9 per cent and was priced 3.9 per cent higher at 9.45 pence as of 1.11 pm in London, where it is based. Rubicon, also based in the UK capital, was down 4.9 per cent at 3.38 pence after earlier trading 16 per cent higher.

Dealing in the enlarged share issue will commence July 2nd following a shareholder vote on June 29th, the companies said. Discount aviation pioneer Stelios, who goes by his first name, will join Rubicon’s board and nominate Winter as its CEO.

The EasyJet founder will also get 5 per cent of Rubicon stock and 0.5 per cent of its revenue for providing consulting services and use of the Fastjet name, which he owns. – (Bloomberg)