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Rubicon Diversified says Airbus A319 will be backbone of the new FastJet fleet

Published: 02:11 03 Jul 2012 EDT

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Rubicon Diversified Investments (LON:RUBI) announced this morning it has chosen the Airbus A319 to be the backbone of its new Africa-focused low-cost carrier, FastJet.

Lonrho (LON:LONR) has teamed up with Sir Stelios Haji-Ioannou to create the airline and will use Lonrho’s Fly540 as the platform for the new business.

Fly540 has been flying in the region for around six years now, has 10 planes (seven turbo-props and three regional jets) and, significantly, holds licences to operate from hubs in Ghana, Kenya, Tanzania and Angola.

It carried around 750,000 passengers last year.

FastJet’s aim is to eventually ferry 12 million passengers between cities in Africa using the low-cost blueprint patented in Europe – an undertaking that would require a 40 strong fleet, but which would create a US$1 billion turnover business. 

Picking the Airbus passenger jet instead of the popular Boeing 737-700 series serves a major statement of intent. 

Commenting today, Rubicon chief executive Ed Winter said: “The decision to launch FastJet with the Airbus A319 enables us to expand rapidly with each aircraft potentially carrying around 250,000 passengers a year.  

“Rubicon expects passenger numbers to double from current levels within six months of the introduction of the A319 fleet.

“We plan to add at least five leased Airbus A319 aircraft to the fleet within six months of launch and up to 15 within a year.”

Winter talked recently about his plans to “democratise” air travel in Africa, which means offering tickets for as little as US$20 before taxes one-way. While low by European standards, it might easily be a week’s wages in Ghana.

That said fares compare favourably with the alternative – bus – where journeys are arduous and dangerous. FastJet is pledging to work to European standards of safety security and customer service. “Neither Stelios nor I would be involved in an airline that didn’t”, said the FasJet CEO.

If Winter and his team get the offering correct then the prize is potentially huge.

There are 100 million people combined in the four countries where the new FastJet has bases, and 335 million in the 15-member Economic Community of West African States.

It only has to tap into a small proportion of the population to have a viable business. 

In fact if say just three per cent of that 100 million use the service twice a year this translates to that magic 12 million passengers a year.

Lonrho will hold 73.7 per cent of the FastJet business, with Stelios's easyGroup receiving a 5 per cent stake and an option to acquire a further 10 per cent at a 30 per cent premium to the price of the last fund-raising.  

The easyJet founder will be on the board, although day-to-day control of the group will fall to Winter, another pioneer of no-frills travel - first with BA’s low-cost airline GO and then easyJet. 

The involvement of Stelios and his easyGroup brings with it the expertise required to set up a low cost airline from scratch.

Analysts say it will also result in lower purchasing and leasing costs.

It certainly seems Airbus is happy to associate itself with the emerging FasJet name.

John Leahy, the plane-maker’s chief commercial officer, said: “We are delighted that FastJet has chosen the A319 as the basis for its fleet, a further endorsement for the efficiency and reliability of Airbus’ market leading single aisle family of aircraft. 

“FastJet will open up low cost travel to the African market, and the Airbus A319 will bring new levels of comfort to air passengers across Africa.  It is a great combination.”

The Airbus A319 has proven itself an ideal aircraft for the low cost airline model in other parts of the world.  The 156 seat A319 was initially chosen after an extensive evaluation of a wide range of options and is ideally suited to the company’s expansion plans. 

Leasing aircraft on operating leases enables the airline to match its rate of growth closely to market requirements.  The first aircraft will be leased from Nomura Babcock Brown and is scheduled for delivery in September or October. 

BBAM is the world’s third largest aircraft leasing company, managing a portfolio of over 450 aircraft. Negotiations on further aircraft deliveries later in the year are underway, Rubicon said this morning.


 

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