It’s the “world leader in low cost flights in Africa”. Its website boasts the cheapest flights and the best service on the continent. What’s more, it could be flying towards a joint venture with EasyJet founder Sir Stelios Haji-Ioannou. Only unfortunately some of its flights don’t seem to exist.
Operating losses for the six months to the end of September topped £7.9m, up from a loss of £4.8m in the previous year. This has led to some analysts suggesting the company could be sold, which was denied by Mr Lenigas. However, the financial and operational performance of Fly540 has not stopped Lonrho’s aviation ambitions enjoying some success. Earlier this month the potential joint venture with Sir Stelios’s easyGroup attracted huge interest from investors.
Rubicon Diversified Investment, a company in which Lonrho is an investor and which Mr Lenigas and his chief executive Geoffrey White, are directors, revealed plans to launch Fastjet, a new African airline with Sir Stelios. The announcement sent Rubicon’s shares soaring from less than 1p to over 10p, before settling back to end the day at 7p. Good news for Lonrho. Two weeks before the share spike, Lonrho, along with unnamed private investors, agreed to buy 40m shares in Rubicon at 1p.
On Rubicon’s current share price of 4p the investment has quadrupled in value netting a paper profit of around £1.2m. The new-found buoyancy in Rubicon’s shares helped the company raise a further £9m from institutional investors last week, this time at 4p a share.
Mr Lenigas said the money would be used to acquire new aircraft for Fastjet. “Stelios is very excited about the prospects in Africa. No it’s not easy getting things done, but the demographics and the economic growth make it enormously attractive.
“What we have done [with Fly540] is demonstrate that the model works. We are currently operating across the network on an 85pc to 92pc load factor. What this is about is a standardised product operating with on-time departures.”
The next step could be to bring the two airlines, Fastjet and Fly540 together, which Mr Lenigas said “was an option”. Trying to roll out that model across Africa will not be easy. Sir Richard Branson spent three years trying it with Virgin Nigeria.
It cost him millions and he pulled out in 2008.
Post Courtesy: The Telegraph
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This is Fly540, an airline owned by Lonrho, the London-listed company once run by Roland “Tiny” Rowland. It lists on its website a string of destinations across Angola, Kenya and Ghana. Last week it was offering flights from Luanda, the capital city of Angola, to Lubango and Benguela. The services were detailed on Lonrho’s website with flight numbers, departure times and price. Some were listed as available, others sold out.
Sources on the ground said neither was taking off. “They haven’t been running for a month,” a Fly540 employee in Benguela Airport said. “No flights this week,” reported another employee in Lubango Airport. “They may be flying next week. I don’t know.”
The discrepancy between what Fly540 is purporting to offer and its operation comes despite Lonrho announcing “a full roll out of services in Angola” to the London Stock Exchange in July. According to Lonrho executive chairman David Lenigas, a listed-market entrepreneur with 147 directorships to his name, the lack of flights between the two destinations reflects the problems of establishing an airline in Africa.
“The flights exist but the aircraft have not arrived yet,” he said. “Those are the flights that we have been given by the aviation authority. We have two new aircraft arriving in January that will service those routes.”
Problems servicing the routes have come hand in hand with huge losses for Fly540. Although Mr Lenigas said last week that the airline “makes money” the most recent accounts show it sinking deep into the red.
Operating losses for the six months to the end of September topped £7.9m, up from a loss of £4.8m in the previous year. This has led to some analysts suggesting the company could be sold, which was denied by Mr Lenigas. However, the financial and operational performance of Fly540 has not stopped Lonrho’s aviation ambitions enjoying some success. Earlier this month the potential joint venture with Sir Stelios’s easyGroup attracted huge interest from investors.
Rubicon Diversified Investment, a company in which Lonrho is an investor and which Mr Lenigas and his chief executive Geoffrey White, are directors, revealed plans to launch Fastjet, a new African airline with Sir Stelios. The announcement sent Rubicon’s shares soaring from less than 1p to over 10p, before settling back to end the day at 7p. Good news for Lonrho. Two weeks before the share spike, Lonrho, along with unnamed private investors, agreed to buy 40m shares in Rubicon at 1p.
On Rubicon’s current share price of 4p the investment has quadrupled in value netting a paper profit of around £1.2m. The new-found buoyancy in Rubicon’s shares helped the company raise a further £9m from institutional investors last week, this time at 4p a share.
Mr Lenigas said the money would be used to acquire new aircraft for Fastjet. “Stelios is very excited about the prospects in Africa. No it’s not easy getting things done, but the demographics and the economic growth make it enormously attractive.
“What we have done [with Fly540] is demonstrate that the model works. We are currently operating across the network on an 85pc to 92pc load factor. What this is about is a standardised product operating with on-time departures.”
The next step could be to bring the two airlines, Fastjet and Fly540 together, which Mr Lenigas said “was an option”. Trying to roll out that model across Africa will not be easy. Sir Richard Branson spent three years trying it with Virgin Nigeria.
It cost him millions and he pulled out in 2008.
Post Courtesy: The Telegraph
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