8 February 2013

Ghana: Five Forty Aviation Withdraws Licences From Fastjet

Five Forty Aviation Limited has withdrawn the licences it granted to Lonhro Aviation (BVI) Ltd which operations in Ghana, Angola, and Tanzania not to use the Fly540 brand with immediate effect.

This is due to the failure on the part of FastJet's Africa Operations to comply with the respective licence agreements signed with the company.

In June 2012, FastJet (formerly known as Rubicon Diversified Investments plc) acquired Lonrho Aviation (BVI) Ltd ("Lonrho Aviation") thereby gaining control of the assets and liabilities of Lonrho Aviation's three subsidiaries namely Fly 540 Angola - Sociedade de Aviação Civil SARL ("Fly540 Angola"), 540 Ghana Limited ("Fly540 Ghana") and Fly540 (T) Limited ("Fly540 Tanzania").

FastJet's Africa Operations have been licensing the Fly540 brand from Five Forty Aviation since 2008. FastJet flies three Fly540-branded planes in Angola and two in Ghana. It flew two planes using the Fly540 brand in Tanzania until November 2012.

On 24 January 2013, lawyers representing Five Forty Aviation Limited wrote to Fly540 Angola, Fly540 Ghana and Fly540 Tanzania respectively to inform them that if they did not demonstrate compliance with the terms and conditions of the licence agreement within seven days, the Company's lawyers would withdraw their ability to use the Fly540 brand.

Specifically, the conditions that are not being adhered to are as follows: Payment of outstanding licence and other fees of US$6.9m, US$0.5m and US$0.3m for Fly540 Tanzania, Fly540 Angola and Fly540 Ghana respectively as well as failure to disclose financial information for December 2012; contrary to the licence agreement and despite several reminders, FastJet's Africa Operations have not provided information to the company's Head of Safety to demonstrate compliance with Five Forty Aviation's accepted safety systems; and failure to provide the Company's Quality Manager with reports demonstrating that the quality systems are in operation.

As FastJet's Africa Operations have failed to respond, notice has been given to Fly540 Angola and Fly540 Ghana to re-paint their aircrafts in a neutral colour.

Additionally, FastJet's Africa Operations have to re-brand all of the sales offices, removing the Fly540 brand; return all materials containing the Fly540 logo; and rename the companies other than 540. Also, as per the licence agreement, the Company has written to the Civil Aviation Authority in all three countries informing them of the withdrawal of the licences.

Don Smith, CEO of Five Forty Aviation, said in press release withdrawing the FastJet licences: "We had no choice but to take this action because the most worrying aspect of non-compliance with the licensing agreement is that we have no way of assuring that the planes are safe to fly. We have not received any safety reports for the past three months from FastJet's Africa Operations and we believe that one plane, which flew with defects from Tanzania and landed in Nairobi on 14 December, should not have flown."

Instructively, Five Forty Aviation Ltd is a low cost airline in Africa that, operating as Fly540, offers flights to destinations in Kenya, Tanzania, Uganda and Sudan. Headquartered in Nairobi, Kenya, Five Forty Aviation was established in 2005 and commenced operations in 2006. It is the first low cost airline in Africa to provide intra-country flights, and domestic flights outside of South Africa.

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