Lonrho Air Acquires Two ATR 42-320 Aircraft for Fly540

22 June 2007
Content from a Premium Partner
Lonrho (London)
press release

Lonrho (AIM: LONR), the African conglomerate with a diverse portfolio of investments ranging from infrastructure, transportation, support services and natural resources, announces that it has acquired two French made ATR 42-320 turbo-prop 42 seat passenger aircraft through its subsidiary Lonrho Air (B.V.I.) Ltd ("Lonrho Air") for a total sum of $6.29m.

Simultaneously, Lonrho Air has entered into a back-to-back lease purchase agreement with Five Forty Aviation Limited ("Fly540"), Lonrho's 49% owned subsidiary, which operates low cost flights in East Africa, whereby the aircraft are leased on a dry lease basis to Fly540 . This lease provides Lonrho Air with annual cash flows of $1.32 million.

IBA Group Limited, who assisted with due diligence and have been retained to provide technical asset management services to Lonrho Air, have given a maintenance adjusted value for the aircraft of $7.5m, a premium on cost price of $1.21 million.

The ATR range of aircraft is known for their versatility and capability to operate even in difficult environments and from short airfields. ATR is currently the most widespread regional aircraft type with more aircraft in service with more operators than any competitor. Low weights, along with an advanced aerodynamic design and highly efficient engines, makes these aircraft extremely efficient for a low cost operator. Low fuel consumption associated with high tank capacity ensures excellent range characteristics and the capability to fly multiple sectors without refueling. The excellent landing and take-off performance enable ATR aircraft to use the shorter runways set aside for commuter operations at many airport hubs. All these characteristics make the ATR an ideal aircraft for operating in Africa.

This deal ensures the long term availability of good quality aircraft for Fly540 assisting in their plans to expand routes into the East Africa region. Fly540 have grown from strength to strength since their first flight in November 2006 demonstrating the demand for low budget air travel in East Africa and the potential that this market offers. The rapidly increasing demand for such services makes this a high growth area of business aligning it with Lonrho's renewed strategic focus.

David Lenigas, Lonrho's Executive Chairman and Chief Executive, commented:

"Lonrho Air has been established to support and supply aircraft to the Lonrho Plc aviation subsidiaries and grow Lonrho's interests in this sector throughout Africa. These ATR's will be operated from Nairobi by Lonhro's subsidiary Fly540. The speed at which this carrier has grown demonstrates the potential of the domestic and regional carrier market in Africa. This reinforces the Lonrho Board's belief that well managed, quality local airlines servicing Africa from a series of central hubs is a highly profitable business model. The concept interacts ideally with the stated aims of international carriers such as BA and Virgin who in today's markets only wish to serve the largest international airports in Africa.

Enquiries:

  • Lonrho +44 (0) 20 7016 5105
  • David Lenigas, Chief Executive +44 (0)7881 825 378
  • Emma Priestley, Executive Director +44 (0)7867 785 177
  • Pelham PR Charles Vivian +44 (0) 20 7743 6672, +44 (0) 7977 297 903
  • Alisdair Haythornthwaite +44 (0) 20 7743 6676, +44 (0) 771 472 1379

Notes to Editors:

About Fly540

Fly540 introduced its first service to Mombasa seven months ago on 24 November, 2006 and was well received by both business and leisure travellers. The airline has since added a further three destinations including Malindi, Lamu and Kisumu and is the pioneering low cost air carrier in East Africa. The airline intends to expand to international destinations towards the end of 2007 to include a minimum of three other regional destinations in East Africa and a further four in 2008.

About Lonrho:

Lonrho Plc is an expanding conglomerate that is rapidly growing a successful business throughout Africa. The Company is listed on the London AIM stock exchange (LONR). Lonrho is strategically focused on the development of business opportunities in infrastructure, transportation, support services and natural resources. The Company has over 20,000 shareholders and substantial institutional backing to support its mandate to build a profitable business that plays a fundamental role in the development of the African economy.

Since 2006, the Company has invested in or acquired control of:

  • Hotel Cardoso - www.hotelcardoso.co.mz (retained)
  • Nare Diamonds - www.narediamonds.com
  • Brinkley Mining - www.brinkley-mining.com
  • Luba Freeport - www.lubafreeport.com
  • Fly540 - www.fly540.com
  • Norse Air - www.norseair.co.za
  • Swissta Holdings - www.swissta.com
  • Countermine plc - www.countermine.com
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