EASTJET PLANS 15-STRONG AIRBUS FLEET IN AFRICA DISCOUNT PUSH

Bloomberg News
By Chris Jasper
July 03, 2012

FastJet, the African discount airline startup backed EasyJet Plc (EZJ)’s Stelios Haji-Ioannou, said it aims to operate 15 leased Airbus SAS aircraft within a year and will be a prospective customer for new models from the European planemaker and U.S. rival Boeing Co. (BA) (BA)

FastJet will add five leased A319 jetliners, which can seat as many as 156 people, within six months, before building up to three times that number, London-based holding company Rubicon Diversified Investments Plc (RUBI) said today in a statement.

Africa’s first continent-wide, low-cost airline will use operating licenses held by majority owner Lonrho Plc (LAF)’s existing Fly540 unit to establish flights in Ghana, Kenya, Tanzania and Angola. The company opted for an Airbus-based fleet after saying last month that E-190 regional jets from Embraer SA (EMBR3) of Brazil were also under consideration.

“The decision to launch FastJet with the Airbus A319 will offer unit costs low enough for us to cut fares and stimulate the market,” Rubicon Chief Executive Officer Ed Winter said in an interview. The airline is likely to move toward purchasing its own planes in three to five years, with the Airbus A320 neo and Boeing 737 MAX the most likely contenders, he said.

Capacity Boost
The first aircraft will be leased from Nomura Babcock Brown Co. and are scheduled for handover as early as September, Rubicon said, with further deliveries due later in the year.

The initial five jets should double Fly540’s capacity to the equivalent of 1.5 million passengers a year within six months, Winter said, with each aircraft potentially carrying upwards of 250,000 passengers.

A rise in GDP and consumer spending means Africa is ready to support a discount carrier of the kind that has transformed aviation elsewhere, according to Winter, who has worked at EasyJet and British Airways. Like carriers from Southwest Airlines Co. in the U.S. to Malaysia’s AirAsia Bhd. (AIRA), Fastjet aims to create a market using fares low enough to persuade some people to fly for the first time and others to travel more.

The four markets to be targeted by Fastjet all have large- scale oil or gas developments, from which wealth is beginning to trickle down to a growing middle class, the executive said.

The airline was established after Rubicon bought Lonrho Aviation, which runs Fly540, in an $85.7 million all-stock reverse takeover which gave Lonrho a 73.7 percent holding.

EasyJet founder and No. 1 shareholder Stelios, who goes by his first name, has a 5 percent stake in Rubicon and will receive 0.5 percent of its revenue for providing consulting services and use of the Fastjet name, which he owns. The discount aviation pioneer also nominated Winter as CEO and will sit on Rubicon’s board.

While European discount operators fly to north Africa and there have been experiments with low-cost carriers south of the Sahara, no pan-continental service has so far been attempted.

To contact the reporter on this story: Chris Jasper in London at cjasper@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net