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EasyJet founder Sir Stelios moves closer to low-cost African airline EasyJet founder Sir Stelios moves closer to low-cost African airline
(about 3 hours later)
EasyJet founder Sir Stelios Haji-Ioannou is set to launch a low-cost airline in Africa this year after taking a 5% stake in a new venture.EasyJet founder Sir Stelios Haji-Ioannou is set to launch a low-cost airline in Africa this year after taking a 5% stake in a new venture.
The easyGroup tycoon, embroiled in a long-running boardroom battle with easyJet, is backing a carrier that will operate under his FastJet brand and will be run by former easyJet executives. FastJet will operate from four countries – Kenya, Tanzania, Ghana and Angola – and harbours ambitions to carry more than 12m passengers a year from 500,000 at present by cashing in on demand for regional travel from a burgeoning African middle class. The easyGroup tycoon, embroiled in a long-running boardroom battle with easyJet, is backing a carrier that will operate under his FastJet brand and will be run by former easyJet executives. FastJet will operate from four countries – Kenya, Tanzania, Ghana and Angola – and harbours ambitions to carry more than 12 million passengers a year from 500,000 at present by cashing in on demand for regional travel from a burgeoning African middle class.
EasyJet remained tight-lipped about the move, referring queries to a 2011 statement that said the Luton-based airline will take "necessary action" if FastJet infringes its rights. However, FastJet's chief executive-in-waiting, former easyJet chief operating officer Ed Winter, said the airline would avoid antagonising its European peer.EasyJet remained tight-lipped about the move, referring queries to a 2011 statement that said the Luton-based airline will take "necessary action" if FastJet infringes its rights. However, FastJet's chief executive-in-waiting, former easyJet chief operating officer Ed Winter, said the airline would avoid antagonising its European peer.
"We have been 100% careful. We are absolutely aware of the agreement, and so is Stelios, and we are not infringing it in any way," he said."We have been 100% careful. We are absolutely aware of the agreement, and so is Stelios, and we are not infringing it in any way," he said.
Under the terms of Wednesday's announcement, an Aim-listed cash shell company called Rubicon has bought the aviation arm of Lonrho, an ancestor of the pan-African conglomerate formerly run by Tiny Rowland, in a deal worth $85.7m (£55m). As part of the deal, easyGroup will own 5% of Rubicon and the airline, using Lonrho Aviation's network, will be called FastJet. It will operate from Lonrho hubs in Kenya, Tanzania, Ghana and Angola. Operating as Fly540, Winder said a 12 million target is feasible. Under the terms of Wednesday's announcement, an Aim-listed cash shell company called Rubicon has bought the aviation arm of Lonrho, an ancestor of the pan-African conglomerate formerly run by Tiny Rowland, in a deal worth $85.7m (£55m). As part of the deal, easyGroup will own 5% of Rubicon and the airline, using Lonrho Aviation's network, will be called FastJet. It will operate from Lonrho hubs in Kenya, Tanzania, Ghana and Angola. Operating as Fly540, Winder said a 12 million passenger target is feasible.
"If you take the four countries, they have a total population of 100 million people. If you estimate that all our customers come from just those countries alone, you could see 3 million of them becoming customers with us and flying a couple of times a year. That would generate something like 12.8 million passengers [annually].""If you take the four countries, they have a total population of 100 million people. If you estimate that all our customers come from just those countries alone, you could see 3 million of them becoming customers with us and flying a couple of times a year. That would generate something like 12.8 million passengers [annually]."
Winter said FastJet would launch towards the end of the summer but would not use its fleet of 10 turboprops and small jets. Instead it will seek to lease larger, modern jets such as the Boeing 737 or the Airbus A319.Winter said FastJet would launch towards the end of the summer but would not use its fleet of 10 turboprops and small jets. Instead it will seek to lease larger, modern jets such as the Boeing 737 or the Airbus A319.
Another former easyJet director set to join FastJet, Richard Boden, said the business would target the west African market. "There is a significant shortage of direct point-to-point flying within the continent, particularly with west Africa. It is very difficult to get from capital city to capital city. There are 16 countries [in the Ecowas west African economic bloc] there and no real regional airline offering regional flights to those countries." However, the financial health of African airlines remains fragile. According to the International Air Transport Association, airline traffic in the continent will grow by 4% this year, but African carriers will make a collective loss of $100m in 2012, having made no profit in 2011 and a profit of $100m in 2010. Another former easyJet director set to join FastJet, Richard Boden, said the business would target the west African market. "There is a significant shortage of direct point-to-point flying within the continent, particularly with west Africa. It is very difficult to get from capital city to capital city." However, the financial health of African airlines remains fragile. According to the International Air Transport Association, airline traffic in the continent will grow by 4% this year, but African carriers will make a collective loss of $100m in 2012, having made no profit in 2011 and a profit of $100m in 2010.
EasyJet has been locked in a dispute with Haji-Ioannou since 2008 over its capacity plans and the purchase of new Airbus aircraft, although another dispute over further use of the easyJet brand was settled in a deal which could earn the tycoon at least £65m over 10 years. Haji-Ioannou and his family control 37.5% of the airline.EasyJet has been locked in a dispute with Haji-Ioannou since 2008 over its capacity plans and the purchase of new Airbus aircraft, although another dispute over further use of the easyJet brand was settled in a deal which could earn the tycoon at least £65m over 10 years. Haji-Ioannou and his family control 37.5% of the airline.
The airline reiterated its statement on FastJet issued last November, which said: "To the extent that any activity of FastJet, Sir Stelios or any company controlled by him infringes or would infringe those rights, easyJet will take necessary action to protect the rights of easyJet and the interests of its shareholders." EasyJet flies from the UK to north African destinations including Marrakech in Morocco but cannot operate domestic African services and its Moroccan services, as well as flights to Jordan and Egypt, represent the limits of its medium-haul ambitions. Haji-Ioannou said the move would help bring low-cost air travel to more Africans. "This is another small but significant step in bringing the dream of low cost air travel to millions of people in Africa – the aviation industry's last frontier. Past experience shows by halving fares, a successful low-cost carrier can encourage those people, who have never previously travelled by air, to fly."
Haji-Ioannou said the move would help bring low-cost air travel to more Africans. "This is another small but significant step in bringing the dream of low cost air travel to millions of people in Africa – the aviation industry's last frontier. Past experience shows by halving fares, a successful low-cost carrier can encourage those people, who have never previously travelled by air, to fly." He added: "For Africa, with its densely populated cities separated by great distances – this means a potential new market of millions."
David Lenigas, executive chairman of Lonrho, said: "I am delighted that Sir Stelios Haji-Ioannou and easyGroup have studied this market and concluded that the Lonrho aviation division provides a unique entry platform for the development of a true low-cost carrier for Africa, to be branded FastJet. The combination of Lonrho's experience in Africa; the aviation experience of Sir Stelios Haji-Ioannou and easyGroup; the route network and operations already established by Lonrho Aviation across Africa and Rubicon's cash resources will enable FastJet to quickly develop its low-cost airline."