fastjet signs option agreement to buy South African low-cost airline 1time
fastjet plc ("fastjet" or the "Company")
Following the recent announcement that fastjet was in talks to buy 1time, the South Africa low cost airline that went into liquidation last month, fastjet has agreed into an option agreement to buy the entire issued share capital of 1time Airline from its parent company, 1time Holdings Limited, for ZAR1 ($US 0.12). Should the option be exercised the agreement is subject to a number of conditions precedent, including UK and South African Regulatory approval and any necessary approval by the shareholders of fastjet's largest shareholder Lonrho plc , the approval of the 1time Holdings Limited shareholders and 1time Airline reaching a settlement with its creditors via a Court sanctioned scheme of arrangement.
fastjet by acquiring the shares would gain the right to operate domestic and regional air services in South Africa. fastjet will be taking over up to three of the twelve aircraft that were in the 1time fleet when the business went into provisional liquidation. The aircraft will all be on new operating lease agreements. The initial routes are all domestic routes serving the cities of Johannesburg, Cape Town, Durban, Port Elizabeth and East London. Ed Winter, Chief Executive Officer of fastjet, said: "I am pleased we have managed to reach a provisional agreement with all parties to buy 1time. Due to protracted negotiations we will not have 1time flying before the Christmas but very much hope that 1time will be flying again early in the New Year. Flights will initially be operated by a number of aircraft from the 1time fleet including McDonnell Douglas MD-82s, MD-83s and MD-87s. In due course we plan to re-fleet with modern Airbus A319 aircraft. "The acquisition of 1time supports fastjet's growth into a pan African low cost carrier and the synergies with fastjet' s existing operations will potentially increase the number of available route networks from South Africa into the rest of Africa. 1time will be rebranded as fastjet brand and sold through fastjet.com. "We are working with the South African authorities who, like us, are completely committed to helping the airline industry in South Africa develop for the benefit of all the people. Lower fares mean more economic growth, more jobs and more prosperity. We hope to keep many of the original 1time staff employed. With the co-operation of the shareholders of 1time we can build an airline that will provide a real choice to South Africans, based on the great reputation of 1time and the low cost experience of fastjet.
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NOTES TO EDITORS
Airline 1time was the second-largest low-cost private airline in South Africa by domestic market share. Based in Johannesburg, it operated 12 aircraft and offered 33 flights a day across eight routes including South Africa to Tanzania, Kenya and Zambia. The airline carried 120,000 passengers a month before its operations were suspended in November 2012 after suffering financially from an old fashioned, inefficient and costly fleet. 1time Airline is a wholly owned subsidiary of 1time Holdings, and operated from its base at OR Tambo International Airport in Johannesburg. Before entering provisional liquidation, it operated a fleet of 12 MD80 series jet aircraft, primarily on domestic South African routes, but also into neighbouring countries including Tanzania, Kenya and Zambia. 1time developed a strong and positive reputation with its customer base, offering a high quality cabin experience. Over a million passengers took advantage of 1time's competitive pricing in the year to November 2012. South African air travel was already below capacity before 1time stopped operations; many routes have very limited availability, despite having high frequencies. The result of this is relatively very high fares.
About fastjet plc
Fastjet is Africa's first low-cost airline. Backed by Sir Stelios Haji-Ioannou, founder of leading low cost airline easyJet, fastjet began flying in November 2012 and operates routes in Tanzania from Dar es Salaam to Mwanza and Dar es Salaam to Kilamanjaro. It plans to open its second hub in Nairobi in Kenya in Spring 2013 followed by hubs in Ghana and Angola. Its ambition is to become Africa's first pan-continental airline, bringing international standards of safety, quality, security and reliability. Fastjet acquired African airline Fly 540 in June 2012 and operates a modern fleet of jet aircraft based on the Fly540 platform of licenses and routes. It has so far leased three Airbus A319 aircraft and plans to operate five within six months of launch and up to 15 aircraft within the first year of flight operations. Fastjet plans to bring an entirely new flying experience to the African market with fares starting a little as $20 one way excluding taxes. Passenger numbers for the month of November stood at 64,670 up 50.2% on the same month last year. fastjet plc is quoted on the London Stock Exchange's AIM market. For more information see www.fastjet.com Significant African Aviation Market Potential Africa is a growth aviation market with regional and intercontinental traffic both growing rapidly as a result of the continent's continued economic expansion. With over one billion people, Africa is hampered by poor infrastructure, a lack of roads and railways and long distances between urban populations. The African aviation market is significantly underserved with air travel spending as a percentage of GDP a fraction of that of other emerging markets. With rapid economic growth and, as a result, the growing wealth of African citizens, more and more people will be able to benefit from aviation and fly for the first time. Airbus forecasts total passenger traffic in Africa will grow at an average yearly rate of 5.7% between 2010 and 2030, well above the 4.8 per cent world average growth rate and expects to deliver more than 1,100 new passenger aircraft, 4% of world deliveries, in the next 20 years to satisfy growing demand. Seven of the top 10 fastest growing global economies are now in Africa with consumer spending for the continent forecast to reach US$1.6 trillion by 2020. A recent McKinsey report (June 2010) forecast that 128 million households in Africa are expected to have discretionary income to spend by 2020, while 50% of Africans are expected to live in cities by the same date with urban jobs bringing rising incomes. The McKinsey report concluded that today the rate of return on foreign investment in Africa is higher than in any other developing region and that early entry into African economies provides opportunities to create markets, establish brands, shape industry structure, influence consumer preferences and establish long-term relationships. The Low-Cost Airline Model The low-cost airline model seeks to attract large numbers of additional passengers by offering significantly lower fares. The fares need to be low enough to persuade people who did not previously travel by air to do so, and others to travel more often. The global experience of launching a low-cost carrier is that it creates a completely new market rather than a redistribution of market share in the existing market.
Posted on 19th December 2012