FastJet Sues African Airline Ally Over Kenyan Market Access

FastJet Plc, seeking to become the first pan-African discount airline, is suing the chief executive officer of its sister carrier in the U.K. courts over access to the licenses it needs to expand flights into Kenya.

FastJet, which currently operates only in Tanzania, filed the suit against Donald Smith, head and partial owner of Five Forty Aviation Ltd. That’s after Smith last month withdrew the right to use the Fly540 brand, saying he was owed $7 million in unpaid bills and hadn’t received required safety information.

London-based FastJet, which began commercial flights Nov. 27, combined with Five Forty Aviation of Nairobi in June to gain access rights in Ghana, Kenya, Tanzania and Angola. The all-share deal was brokered by Lonrho Plc, which now owns 56 percent of FastJet, and backed by Stelios Haji-Ionnou, the founder of EasyJet Plc, Europe’s second-biggest discount airline.

“FastJet is adamant that Mr Smith has been paid his full consideration and we will now ask the High Court of Justice to rule on this,” Chairman David Lenigas said today. “We sincerely hope that the process will be dealt with speedily so that the unnecessary and apparently contrived confusion surrounding control of the Kenyan operations can finally be put to rest.”

London-based Lonrho has African interests ranging from agribusiness to hotels, ports, and computer support services.

Obligations Unfulfilled

While FastJet says it controls 99 percent of Fly540 Kenya, Smith contends that it reneged on the deal and that no ownership change took place, leaving him with a near 51 percent stake.

“Not all obligations of the deal have been fulfilled,” he said in an e-mail. “Aspects such as the payment of intra-company debt as well as the issuance of my shares remain outstanding.”

FastJet said yesterday it will add two more routes to its network, lifting capacity by 50 percent, with flights from the Tanzanian tourist hub of Kilimanjaro to the island of Zanzibar and to Mwanza on Lake Victoria, starting March 18. The services will be operated by its fleet of three leased Airbus SAS A319s.

The airline filled 81 percent of seats last month, carrying 26,387 people on its initial two routes from Dar es Salaam to Mwanza and Kilimanjaro.

FastJet rose as much as 7.9 percent before closing 5.9 percent higher at 2.68 pence in London, valuing the company at 55.5 million pounds ($83 million). The stock has declined 30 percent this year.