Lonrho's Fly540 to commence flights in Zimbabwe
July 01 2009 - 10:35AM
UK Regulatory
TIDMLONR
RNS Number : 9407U
Lonrho PLC
01 July 2009
1st July 2009
LONRHO PLC
("Lonrho" or the "Company")
Lonrho's Fly540 to commence flights in Zimbabwe
Lonrho Plc ( AIM : LONR ) is pleased to announce that LonZim Plc ( in which it
holds 24.53% ) is to commence operations for a Fly540 airline based in Zimbabwe
to service both the domestic and regional markets and emerging local and
connecting traffic. Flights are scheduled to start from September 2009.
Fly540 is a Lonrho Plc owned airline operating in Africa and to international
standards. Fly540 is being rolled out across Africa with local partners in each
country, to service the domestic and regional African markets. The company
provides local and regional distribution for international flights coming into
Africa with a safe, reliable and punctual service. Fly540 is building a unique
African airline connecting Africa north to south and east to west. (
www.fly540.com )
Fly540 Zimbabwe will deliver affordable air links to key domestic and regional
cities from a Harare hub and will be an integral part of the Fly540 network that
will be flying in nine African countries by the end of 2009.
The launch of Fly540 Zimbabwe is also central to LonZim's investment strategy of
identifying current market opportunities in Zimbabwe and establishing companies
that will benefit from the economic recovery of the country. The potential
aviation market on a domestic and regional basis is significant and currently
underserved. For Zimbabwe to rebuild its economic base and attract investment it
is essential that it has a first world transport capability. Having observed the
market opportunity for over a year, Fly540 believes that now is the right time
to commence operations.
LonZim Air, a wholly owned subsidiary of LonZim plc, has invested US$ 200,000 in
the acquisition of 90% of Zimbabwe company Sol Air ( private ) Limited. Fly540
Zimbabwe has now obtained the necessary Air Services Licence and following
completion of the arrangements with Lonrho's Fly540 it will be possible for
Fly540 Zimbabwe to finalise the necessary permissions to operate. A further US$
4.3 million ( resulting from an independent valuation) will be invested in
acquiring an ATR 42 turbo prop from the Lonrho Aviation fleet, and US$ 2.0
million for the operational costs associated with commencing operations and a
working capital provision of US$ 3.9 million for the first twelve months. This
capability will be complemented by a freight service. Fly540 Africa ( BVI ) will
receive US$ 100k to initiate flight operations in Zimbabwe, and thereafter a
license fee of 2.5% of gross turnover and a monthly management fee of US$ 35,000
for managerial services.
Fly540 Zimbabwe will operate the 'low cost' airline from Harare International
Airport and is scheduled to open flights to Bulawayo and Victoria Falls on a
domestic basis and Lubumbashi; Lilongwe; Lusaka; and Beira on an international
basis. Once established, the route network will be expanded.
The agreements between Fly540 Africa (BVI), a wholly owned subsidiary of Lonrho
plc and LonZim Air (BVI), a wholly owned subsidiary of LonZim plc,to acquire the
ATR42 aircraft and enter into the Fly540 license agreement and management
agreementhave been treated by Lonrho Plc as a related party transaction under
the AIM Rules for Companies. The disposal price of the aircraft is approximately
equal to the current book value in the Lonrho accounts and the proceeds will be
used for additional working capital for the ongoing growth of Fly540. The Lonrho
independent directors who are not directors of LonZim Plc being David Armstrong,
Donald Strang and Frances Cook) consider, having consulted with the Company's
nominated adviser Beaumont Cornish Limited, the contracts to be fair and
reasonable in so far as shareholders are concerned.
David Lenigas, Executive Chairman of LonZim stated:
"We are delighted to be able to launch Fly540 in Zimbabwe. Not only does it make
sound commercial logic, but it is an important step forward for Zimbabwe and
helps stimulate economic recovery. Good transport networks are essential for the
growth of Africa, and Fly540 is delivering an international standard, quality
aviation service connecting the continent."
Enquiries
+----------------------------------------+------------------------------------+
| Lonrho Plc | |
+----------------------------------------+------------------------------------+
| David Lenigas, | +44 (0)20 7016 |
| Executive Chairman | 5105 |
+----------------------------------------+------------------------------------+
| Geoffrey White, | +44 (0)20 7016 |
| Chief Executive | 5105 |
| Officer | |
+----------------------------------------+------------------------------------+
| David Armstrong, | +44 (0)20 7016 |
| Finance Director | 5105 |
+----------------------------------------+------------------------------------+
| Emma Priestley, | +44 (0)20 7016 |
| Executive Director | 5105 |
+----------------------------------------+------------------------------------+
| | |
+----------------------------------------+------------------------------------+
| Pelham PR | |
+----------------------------------------+------------------------------------+
| Charles Vivian | +44 (0) 20 7337 |
| | 1538 |
+----------------------------------------+------------------------------------+
| | +44 (0) 7977 |
| | 297903 |
+----------------------------------------+------------------------------------+
| James MacFarlane | +44 (0) 20 7337 |
| | 1527 |
+----------------------------------------+------------------------------------+
| | +44 (0) 7841 |
| | 672831 |
+----------------------------------------+------------------------------------+
| | |
+----------------------------------------+------------------------------------+
| Beaumont Cornish | |
| Limited (NOMAD) | |
+----------------------------------------+------------------------------------+
| Rosalind Hill | +44 (0) 20 7628 |
| Abrahams | 3396 |
+----------------------------------------+------------------------------------+
| Roland Cornish | +44 (0) 20 7628 |
| | 3396 |
+----------------------------------------+------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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