fastjet signs agreement to enter South Africa

Africa's low-cost airline fastjet has signed an agreement with South African investment company Blockbuster to operate services in the country.

The venture is aiming to begin flights by the end of May with the first route from Johannesburg to Cape Town.

Blockbuster has struck a commercial deal with Federal Airlines. fastjet, which began operating flights in Tanzania in late November, said the agreement will allow it to leverage Federal Airlines' existing licensing infrastructure and deliver its services to South Africa.

The announcement comes after negotiations over fastjet's bid for liquidated South African airline 1time fell through, as the company felt the value of the business had "diminished over time".

"As there is still no indication that 1time creditors will accept the fastjet offer, the company has therefore chosen to invest in the Blockbuster/Federal Airlines venture to pursue its entry into an important African market and a country well-suited to fastjet's low-cost operating model," the group said.

fastjet has raised additional working capital to assist with the South Africa launch.

The carrier received legally binding commitments to raise £2.0m by way of the issue of 160m new ordinary shares at a price of 1.25p per share.

David Lenigas, fastjet's Chairman said: "Air fares in South Africa have skyrocketed since 1time ceased flying at the end of last year, and many planes are operating at full capacity - specifically on the key Johannesburg to Cape Town and Durban routes.

"Today is an incredibly exciting day for fastjet, not just in South Africa, but across the entire continent. As populations grow and disposable income and consumer spending increases, there is greater demand for affordable air travel. We would like to be part of the solution."

RD