Fastjet to start again in Kenya after Fly540 disposal

African low cost airline Fastjet (LON:FJET) is to set up its own Kenyan operation following the disposal of its stake in Fly540 Kenya.

Fastjet inherited its stake when it reversed into Lonrho Aviation in 2012. It is selling it to Don Smith, one of Fly540 Kenya’s directors. Smith and Fastjet signed a memorandum a year ago to settle an acrimonious dispute over Fly540 Kenya’s debts.

Fastjet said today’s agreement wholly removes Fly540 Kenya from the group, with all legal and financial ties between the two companies dissolved with each group indemnified for any future liabilities.

Ed Winter, Fastjet’s interim chairman and chief executive, said: "Following a period of complex negotiations, we are delighted to have achieved a successful outcome for all parties.

“After a thorough and lengthy evaluation of Fly 540 Kenya, we concluded that converting the business into the Fastjet low-cost model would not be economically viable.

“Disposing of our investment in Fly 540 Kenya allows us to pursue our priority objective of creating Fastjet Kenya as a new entity”

Fastjet said it has not been consolidating Fly540 Kenya’s losses while the US$10mln carrying value of its stake will be written off in the 2013 accounts.