Wednesday, December 19, 2012

■ SOUTH AFRICA: fastjet set to acquire 1Time for R1 with flights due in early 2013.

fastjetFollowing the recent announcement that it was in talks to buy 1Time (T6), the South African low cost airline that went into liquidation last month, fastjet(FN), has entered into an option agreement to buy the entire issued share capital of 1time Airline from its parent company, 1time Holdings Limited, for ZAR1 (USD0.12). Initially, the airline will operate with three 1Time aircraft before Airbus A319s are added and the airline completely rebranded to fastjet.

The news of the buyout comes after 1Time Airline's provisional liquidator Tshwane Trust, on Wednesday, said  1Time's final liquidation had been postponed to February next year, pending negotiations with Fastjet.

Whilst the R1 buy out is token, 1time owes its creditors more than ZAR450million (or USD46million (of which the largest tranche -USD16.8million- is owed to the Airports Company South Africa (ACSA)) and has been in discussions with them since March to find an acceptable repayment model.

Should fastjet exercise its option to buy 1Time, the agreement will still be subject to a number of other conditions including:
  • UK and South African Regulatory approval, 
  • any necessary approval by the shareholders of fastjet’s largest shareholder Lonrho plc, 
  • the approval of the 1time Holdings Limited shareholders,
  • 1time Airline reaching a settlement with its creditors via a Court sanctioned scheme of arrangement. 
By acquiring the shares, fastjet would gain the right to operate domestic and regional air services in South Africa previously operated by 1Time, a move akin to its fly540 buy out which essentially gave it the right to operate flights in Kenya, Tanzania, Angola and Ghana via the fly540 AOC.

fastjet will be taking over up to three of the twelve aircraft that were in the 1time fleet when the business went into provisional liquidation with all of them set to be on new operating lease agreements. 

Initial routes will include all domestic routes to various South African cities including:
  • Johannesburg, 
  • Cape Town, 
  • Durban, 
  • Port Elizabeth,
  • East London.
Ed Winter, Chief Executive Officer of fastjet, said: 
fastjet's 3rd A319 in Dar es Salaam
fastjet's 3rd A319 in Dar es Salaam (Fastjet)
“I am pleased we have managed to reach a provisional agreement with all parties to buy 1time. Due to protracted negotiations we will not have 1time flying before the Christmas but very much hope that 1time will be flying again early in the New Year. Flights will initially be operated by a number of aircraft from the 1time fleet including McDonnell Douglas MD-82s, MD-83s and MD-87s. In due course we plan to re-fleet with modern Airbus A319 aircraft.

“The acquisition of 1time supports fastjet’s growth into a pan African low cost carrier and the synergies with fastjet’s existing operations will potentially increase the number of available route networks from South Africa into the rest of Africa.  1time will be rebranded as 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. 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."
Source [fastjet]

Of added interest is how the fastjet deal would affect 1Time's previous tie up with Zimbabwean LCC FreshAir (Z7) in whom 1Time held a 49% shareholding. Should the deal proceed as before (fastjet, as opposed to 1Time, would provide the equipment with the majority Zimbabwean shareholders, Nu-Aero, providing the AOC), it would give fastjet a foothold into yet another lucrative, yet underserved, aviation market - Zimbabwe. 

Ironically, fastjet's predecessor, Fly540, was set to enter the Zimbabwean market in 2010, but failed to do so for unclear reasons.