Lonrho Africa has acquired 49 percent of the shares in Kenyan airline Five Forty Aviation (Fly540) and a stake in Luba Freeport in Equatorial Guinea. According to the group on Wednesday, Fly540 cost the group $1.5-million (R11.
6-million) while its 63 percent stake in the Luba Freeport cost $2-million (R15.45-million) in cash. Fly540 is a recently established low cost airline based in Nairobi.
As well as providing freight services, Fly540 has been created to meet the growing demand for alternative domestic and regional air travel within Africa. Kenya is seen as an ideal base for the new airline as the country is a popular tourist destination with a thriving domestic air travel market, Lonrho said. Fly540 plans to commence operations in Kenya within two months, with the inaugural route being the busy Nairobi-Mombasa connection.
This will be followed by regular services to Malindi and Kisumu. the aim of transforming the group into a transcontinental carrier, Fly540 intends to launch its first international services into the East African region with a minimum of four new destinations. A further four routes are also planned for 2008.
"Our investment in Fly540 represents a solid platform into the Kenyan business sector and an ideal fit with Lonrho"s objective to invest in businesses that can make a substantive difference to the region. "Business in Africa is currently severely hampered by the lack of short haul flights between East and West and we strongly believe that Fly540 represents an excellent investment opportunity," said Lonrho CE David Lenigas. As part of its Luba Freeport acquisition, Lonrho Africa has also agreed to acquire secured debt of approximately $11.
3-million from Amerada Hess, a major client of Luba Freeport. Lenigas will become chairperson, the company said on Wednesday. In recent years, Luba Freeport has established a reputation within the West African region as an efficient and cost effective Freeport.
The port acts as a logistics centre for the burgeoning oil and gas industries in the Gulf of Guinea and services major oil companies in the region. As part of the deal, Lonrho Africa has agreed with the government of Equatorial Guinea to maintain the overall development program for the Port facilities. Luba Freeport, which provides a sheltered deepwater environment, was awarded a 25-year concession by the government with two five-year extension options.
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