RNS Number : 7336G
Rubicon Diversified Investments PLC
03 July 2012
Rubicon Diversified Investments Plc
("Rubicon" or the "Company" or "FastJet"; AIM: RUBI)
FastJet chooses Airbus A319 to launch low cost African airline
Rubicon today announces it has chosen the Airbus A319 aircraft to launch its new low cost carrier, FastJet, across Africa, with the first aircraft expected to carry passengers by October. FastJet will operate under a brand licence agreement with easyGroup Holdings Limited ("easyGroup") and Sir Stelios Haji-Ioannou, founder of leading low cost airline, easyJet.
Commenting on the announcement, Rubicon Chief Executive Ed Winter, said:
"The decision to launch FastJet with the Airbus A319 enables us to expand rapidly with each aircraft potentially carrying around 250,000 passengers a year. Rubicon expects passenger capacity to double from current levels within six months of the introduction of the A319 fleet.
"We plan to add at least five leased Airbus A319 aircraft to the fleet within six months of launch and up to 15 within a year."
John Leahy, Airbus Chief Commercial Officer Customers, added:
"We are delighted that FastJet has chosen the A319 as the basis for its fleet, a further endorsement for the efficiency and reliability of Airbus' market leading single aisle family of aircraft.
"FastJet will open up low cost travel to the African market, and the Airbus A319 will bring new levels of comfort to air passengers across Africa. It is a great combination."
The Airbus A319 has proven itself an ideal aircraft for the low cost airline model in other parts of the world. The 156 seat A319 was initially chosen after an extensive evaluation of a wide range of options and is ideally suited to the Company's expansion plans. Leasing aircraft on operating leases enables the airline to match its rate of growth closely to market requirements.
The first aircraft will be leased from Nomura Babcock Brown Co., Ltd. (BBAM Aircraft Management LLC), and is scheduled for delivery in September/October. BBAM is the world's third largest aircraft lessor, managing a portfolio of over 450 aircraft. Negotiations on further aircraft deliveries later in the year are underway.
Rubicon announced on 29 June the successful completion of its deal with Lonrho Aviation and its airline Fly540, providing the merged group with existing aviation platforms in Ghana, Kenya, Tanzania and Angola. Lonrho Plc owns 74.9% of the London-listed aviation business and Stelios' easyGroup will own 5%.
David Lenigas, Executive Chairman of Rubicon and of Lonrho Plc, stated:
"FastJet has already stated its intent to raise the bar on air safety in Africa by operating its aircraft under the same strict rules that apply to European carriers. To this end, we expect to sign an agreement with a major European MRO (Maintenance, Repair and Overhaul) company for the maintenance of its new A319 fleet in the coming months."
"Our management team has been actively engaged in detailed discussions with a number of Governments to lobby for incentives and reduced passenger taxes, factors that will affect our final decision on where to deploy the first A319s."
For further information please contact:
Rubicon Diversified Investments Plc
Tel: +44 (0) 20 7887 1421
Citigate Dewe Rogerson (on behalf of Rubicon and FastJet)
Tel: +44 (0) 20 7638 9571
W.H. Ireland Ltd.
Tel: +44 (0) 20 7220 1666
NOTES TO EDITORS
Rubicon Diversified Investments Plc
Rubicon was incorporated on 8 February 2006 and admitted to AIM on 6 September 2006, originally as a software company.
At a General Meeting on 21 December 2011, a new investing policy was adopted of seeking an acquisition or acquisitions in the global aviation and aviation services sector with a particular focus on Africa. Following the meeting David Lenigas and Geoffrey White, Chairman and CEO respectively of Lonrho Plc, joined the Rubicon Board and a share placing was undertaken raising £400,000.
On 5 December 2011, Rubicon entered into a conditional letter of intent with easyGroup, under which easyGroup would become a shareholder in Rubicon and that the Company would use the consulting services of Sir Stelios Haji-Ioannou and easyGroup's experienced aviation management team to provide general advice on the feasibility of implementing a low-cost, point-to-point, no frills, all jet airline business model for Africa. The Company then raised a further £9,000,000 in December 2011 by way of a placing of 225,000,000 ordinary shares at 4p per share.
For further information, please see www.rubicondiv.co.uk
Lonrho Aviation and Fly540
Lonrho entered the regional air travel market in Africa in October 2005 with the acquisition of 49% of Five Forty Aviation Limited ("Fly540"). Fly540 commenced operations in Kenya in November 2006 on its inaugural route, Nairobi to Mombasa. Operations from Dar es Salaam in Tanzania started in 2007, operations in Angola began from Cabinda the third hub airport in January 2011 and Ghanaian services began from the Company's fourth regional hub in Accra in December 2011. This roll-out has established four strategic pan-African hubs, giving Fly540 a network spanning West, East and South-West Africa. The route network can be seen at www.fly540.com.
Lonrho Aviation owns four and leases a further six aircraft, six of which operate from Jomo Kenyatta International Airport in Kenya and neighbouring Tanzania, three serve the Angola International Airport hub in Luanda, and one services routes in Ghana between Kotoka International Airport in Accra and Tamale, Kumasi and Takoradi. The East Africa hubs carry approximately 40,000 passengers per month, and the Angola and Ghana hubs carry approximately 13,000 and 9,000 passengers per month respectively.
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 simply driving down prices in the existing market.
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.
Posted on 3rd July 2012