fastjet Plc, Africa’s low-cost airline, says it has signed anagreement to dispose of its holding in Fly540 Kenya, the loss-makinginvestment it inherited as part of the acquisition from LonrhoAviation, to Don Smith, a director of Fly540 Kenya. The agreementwholly removes Fly 540Kenya from the fastjet group.
All legal and financial ties between the two companies have beendissolved and each group has indemnified one another against any andall liabilities relating to the segregation of the businesses.
Ed Winter, Interim Chairman and Chief Executive of fastjet, said:“Following a period of complex negotiations, we are delighted to haveachieved a successful outcome for all parties. After a thorough andlengthy evaluation of Fly540 Kenya, we concluded that converting the
business into the fastjet low-cost model would not be economicallyviable.
“Disposing of our investment in Fly540 Kenya allows us to pursue ourpriority objective of creating fastjet Kenya as a new entity whichwill operate to the same low-cost model, international standards ofsafety, reliability and punctuality as fastjet Tanzania and utilisethe same commercial strategy and distribution platforms. Furtherinformation on the Company’s plans to launch fastjet Kenya will beannounced in due course.”
Fly540 Kenya is treated as an investment in the fastjet Group accountsas fastjet does not have financial control over it and has notincluded its losses in the Group consolidated accounts. Most of theinvestment has already been written down and the remaining US$10m willbe written down in the full year 2013 accounts. The disposal, which isfor a nominal sum, is a related party transaction under the AIM Rulesas it is a disposal to a director of Fly540 Kenya. The directors offastjet consider having consulted with WH Ireland, that the terms arefair and reasonable insofar as its shareholders are concerned.