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FastJet at dilemma as partner demands further $7m

9th February 2013
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FastJet

The future of the low-carrier airline, FastJet, is at the crossroads following its simmering wrangle between the UK-based aviation company and Kenya’s Fly 540 -- a long-standing bill of $7m/- (Sh11.2 billion).

But as FastJet moved quickly to assure its customers and the general public that its operations wouldn’t be halted, its partner from Kenya, Fly 540 insisted that it has withdrawn the operation licence effective Wednesday pending the more pays from the UK based airline.

 On Wednesday this week, Fly 540 authorities announced that the firm would withdraw the leniences it had granted to FastJet Africa to operate in Tanzania, Angola and Ghana due to the unpaid fees for the purchase of its interest in Fly 540.

The legal dispute between the two air lines -- FastJet and Fly 540 -- has all ready been committed to the Tanzania Civil Aviation Authority of which it received the copies from these firms.

Details of the dispute emerged a few days ago after Fly 540 said it was lodging legal action over a $6.78 million debt which FastJet is alleged to have failed to settled

However, FastJet has since denied the allegation.

Briefing reporters in Dar es Salaam yesterday, the FastJet Commercial Manager, Jean Uku said in response to recent reports by David Lenigas, Chairman of FastJet and Chairman of Fly 540 Aviation Limited confirmed that there was no valid brand or management agreement between these two airlines, nor any other Fly  540 association Companies in Africa.

According to FastJet, the Board of Directors of Fly540 Kenya has never met to even consider this issue, and this has since been confirmed by other directors.

“It has been widely recognized by the public of Tanzania that this is nothing but an attempt to undermine our business credibility and reputation.  We have at this time received much welcome public support,” Jean elaborated

Uku told reporters that FastJet had already paid 49 percent of Lon Rhow’s shares and that it would settle the rest soon.

She insisted that the company would not close down, and that they are not going to let anyone sabotage their business. She added that the fate of the commercial manager would be made public soon.

During the first three months of operation in Tanzania, the low cost carrier transported about 30,000 passengers, which is 70 percent occupancy per seat; and 40 percent of these passengers paid a low fair of $20, according to the company’s Chief Executive Officer, Ed Winter

She added that Fast Jet is operating on time with no cancelled or rescheduled of flight due to technical problem, and many of their flight arriving early than it scheduled.

David Lenigas,  the FastJet Chairman, was quoted as saying that FastJet had paid Don Smith and his partners well in excess of US$6m/- for their interest in Fly540 for their interest and associated brands – but are now aggressively seeking to have their purchase contract enforced.

  In June, 2012, FastJet’s parent company, a UK-based investment firm, Rubicon, paid $86m to secure 49% of Lonrho’s aviation business Fly540. Following the deal, FastJet became the holding company of Fly540, allowing it to use Fly540’s existing infrastructure, hubs and airline licences in Kenya, Tanzania, Angola and Ghana to operate. The low carrier airline deployed two Airbus A319s it has leased from Volito Aviation to begin its operations in Africa.

A year after its launch, FastJet expects to have 15 aircraft operating in the continent, five of which will be Airbus A319s. Another projection that FastJet is banking on is doubling Fly540’s current record of carrying 750,000 passengers in its first year of operations.

SOURCE: THE GUARDIAN