Lonrho Signs Agreement to Establish It's Regional Airline, Fly540, in Angola

9 October 2007
Content from a Premium Partner
Lonrho (London)
press release

Lonrho (AIM: LONR), the expanding conglomerate with a portfolio of African investments, is pleased to announce that it has signed an agreement that, subject to the approval of a final business implementation plan to be submitted shortly, will lead to the creation of a joint venture with GEFI, (Sociedade de Gestao e Participacoes Financeiras SARL), one of the largest internal investment companies in Angola, to set up a new airline in Angola.

The airline will be called 'Fly 540 Angola', and will replicate Lonrho's successful Fly 540 airline which is already established and operating in Kenya. Lonrho will utilise the skill and experience available within the existing Fly 540 operation to rapidly develop the new airline to become a major market force in Angola.

GEFI, through its wholly owned aviation subsidiary, Planar, has provisionally agreed to provide Planar's assets to the joint venture including a 1,000m2 hangar; 400m2 of offices and a ticket office on a long term, peppercorn, rental at 4th February International Airport, the main airport in Luanda. Planar currently hold an Air Services Licence which will be used for Fly540 Angola.

It is planned to commence operations in the domestic market early in 2008. Initial deployment will be a combination of modern turboprops and regional jets, which will provide regular scheduled services to ten key locations within Angola. The new airline will focus on quality, reliable passenger services and it is scheduled to be operating ten aircraft by the end of 2008.

Freight and charter markets will also be developed concurrently with the passenger market. The budget for establishing the company in year one has been committed at US$ 9.0 million, of which Lonrho will provide US$ 3.0 million with US$ 6 million funded locally.

Fly540 Angola will be defined as a 'strategic company' under Angolan legislation, as a result of which 51% of the company will be held by GEFI and/or other Angolan partners. However, under the terms of the joint venture agreement, Lonrho will receive 60% of the profits of the business.

Aviation services provide an essential means of transport in Angola, where the population is very dispersed and the road and rail infrastructure cannot meet demand.

David Lenigas, Chairman and CEO of Lonrho commented:

"The results of our market analysis show that the domestic market in Angolan aviation is growing at 20% per year and we also plan to commence international flights in due course. "This is a significant further step in establishing Fly540 as an integrated, pan African regional carrier of international standards. We expect Fly 540 to be flying in seven countries by the end of the first quarter of 2008."

ENQUIRIES

Lonrho Plc +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 297903

Alisdair Haythornthwaite +44 (0) 20 7743 6676 +44 (0) 7714 721379

Collins Stewart Europe Hugh Field +44 (0) 20 7523 8350 Jonny Sloan

NOTES TO EDITORS

About GEFI:

GEFI is one of the largest internal investment companies in Angola, with successful joint ventures in more than forty companies in the industrial, services and financial sectors including CUCA (Angola's largest brewery), Port operations with Maersk and in the financial sector with Banco Sol.

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
  • Luba Freeport - www.lubafreeport.com
  • Fly540 - www.fly540.com
  • Norse Air - www.norseair.co.za
  • Swissta Holdings - www.swissta.com
  • SA Independent Liner Services
  • Bytes and Pieces
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