Lonrho to set up new low-cost airline for continent

DIVERSIFIED investment holding company Lonrho is setting up a new low-cost African airline, Fastjet, and will list its aviation division on the London Stock Exchange.

The initiative is in conjunction with EasyJet founder Stelios HajiIoannou and EasyGroup.

Fastjet would not operate in SA in the near future, but the group’s focus would be on east, west and southern African countries in the short term— an initiative that Lonrho executive chairman David Lenigas said could “change African GDP (gross domestic product) growth”.

Lonrho said yesterday it would dispose of its aviation business, Lonrho Aviation, to Rubicon Diversified Investments, an AIM-listed investment company, for $85,7m, via a reverse takeover.

Lonrho’s already-established Fly540 airline will be used to establish the Fastjet brand, with services starting this year. Rubicon will facilitate the move and a meeting of Rubicon’s shareholders, for the purpose of approving the transaction, will be held on June 29.

Mr Haji-Ioannou’s EasyGroup Holdings will own 5% of the ordinary share capital of Rubicon. Mr HajiIoannou said Fastjet would operate to European standards.

Johannesburg- and London Stock Exchange-listed Lonrho focuses on African markets, with core services in agriculture, logistics, transport and infrastructure.

Mr Lenigas said that the demand for low-cost airlines in Africa was huge, as government-owned airlines were usually too expensive and this had kept people from flying.

Lonrho aimed to implement a similar low-cost model in Africa to the one that EasyJet began with in Europe, where the airline became very successful, he said.

Regular, low-cost flights were instrumental in transforming Eastern Europe, he said.

Mr Lenigas said Fastjet would use Lonrho’s established hubs in Kenya, Tanzania, Ghana and Angola to quickly spread its operations south to Botswana, Zimbabwe, Mozambique, and the Democratic Republic of Congo, as well as to east and west African countries.

Because SA’s low-cost airline market was already “very competitive and established”, Lonrho had no plans to operate in the country in the near future, although it would eventually aim to enter the market, he said. Instead, it would focus on the “gaping holes” in the West African and booming East African markets, and the need for flights between them, Mr Lenigas said.

Lonrho would introduce larger jets with 160 seats to its fleet, and the fleet would be standardised over time. Mr Lenigas said clients would have an easy choice when paying $20-$60 for flights, as most Africans were used to long, costly bus trips.

Fly540 had a turnover of $57m and carried 525 375 passengers in the 15 months to December last year. Passenger loads “continued to increase”, with Fly540 carrying 53 225 for the month of May this year, Mr Lenigas said.

Mr Haji-Ioannou said Africa was “the aviation industry’s last frontier” and the continent — with its denselypopulated cities that were separated by great distances — was “a potential new market of millions”.