Negotiations to buy South African airline 1time

RNS Number : 6805S

Fastjet PLC

04 December 2012

 



4^th December 2012

fastjet plc

("fastjet" or the "Company")

fastjet in negotiations with liquidator to buy South African low-cost airline 1time

Following recent speculation in the South African press, fastjet announces that it is currently in negotiations with the management, directors and provisional liquidator of 1time, the South Africa low cost airline that ceased trading last month.  The negotiations, which have not yet concluded, and are subject to Board, parent company, and Regulatory approval, would allow fastjet to purchase 1time Airline from its parent company, 1time Holdings.

The proposed transaction would involve fastjet paying a nominal fee for the purchase of 1time Airline and reaching a settlement with the 1time creditors. 

Ed Winter, Chief Executive Officer of fastjet, said: "If this transaction goes ahead - and the timescales are extremely challenging - we would hope to get 1time flying again in time for the Christmas holiday period, when many customers have had their plans dashed by the cessation of 1time services and the subsequent huge increases in fares by competitors. Flights would initially be operated by a number of aircraft from the 1time fleet including McDonnell Douglas MD-82s, MD-83s and MD-87s, but restructuring plans would see a rapid re-fleeting with modern Airbus A319 aircraft.

"The acquisition of 1time would be a complementary strategic fit for fastjet's growth into a pan African low cost carrier and the synergies with fastjet would potentially increase the number of available route networks from South Africa into the rest of Africa.  1time would be rebranded into the 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 and and 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.

ENDS

UK media - Citigate Dewe Rogerson                                                    Tel: [phone]

Angharad Couch

Patrick Donovan

Chris Barrie

Eleni Menikou

Africa Media - Africa Practice                                                                  Tel: [phone]

Natalie Maule

Anna Riley

Joan Kiambati

Meg Muigai

Evelyn Njoroge

For investor enquiries please contact:

fastjet plc                                                             Tel: [phone]

Ed Winter

David Lenigas

Richard Blakesley

Geoffrey White

W.H. Ireland Ltd.                                                                                           Tel: [phone]

James Joyce

Nick Field

NOTES TO EDITORS

About 1time 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 Plc is the holding company for African airline Fly540, which operates from four bases in Kenya, Tanzania, Ghana and Angola.  Fly540 currently has 10 aircraft serving around 25 domestic and regional destinations, carrying approximately 750,000 passengers per year with a strong emphasis on safety, security and reliability.

Following a consultancy assignment by easyJet founder Sir Stelios Haji-Ioannou's easyGroup focused on determining the feasibility of launching a European-style low-cost carrier in Africa, we are now preparing for the launch of fastjet, Africa's first low-cost carrier, flying a modern fleet of jet aircraft based on the Fly540 platform of licences and routes. First flights under the fastjet brand began last month , bringing an entirely new flying experience to the African market.

Passenger numbers for the month of October stood at 51,015, up 26.6% 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.

 

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