TIDMFJET
RNS Number : 4665S
Fastjet PLC
09 July 2020
fastjet Plc
("fastjet", the "Company" or the "Group")
Contracts with Solenta
9 July 2020
fastjet, the low-cost African airline, today provides details of
historical contracts it entered into, via its subsidiaries fastjet
Zimbabwe Limited ("fastjet Zimbabwe"), Federal Airlines (Pty) Ltd
("FedAir") and fastjet Mozambique Limitada ("fastjet Mozambique")
with Solenta Aviation Holdings Limited ("SAHL"), Solenta Aviation
(Pty) Ltd ("Solenta Aviation") and Solenta Aviation Mozambique S.A
("Solenta Mozambique"), and together with SAHL and Solenta
Aviation, ("Solenta").
SAHL is a Maltese registered holding company of several airline
and maintenance investments and aviation focused businesses
throughout Africa. Solenta Aviation and Solenta Mozambique are both
subsidiaries of SAHL and are considered related parties to the
Company by virtue of being subsidiaries of SAHL, which is a
Substantial Shareholder of the Company as defined in the AIM Rules
for Companies (the "AIM Rules"),.
Solenta have historically provided, and currently provide,
aviation related services to the Company and/or its subsidiaries
through multiple contracts. Certain of the contracts outlined below
(the "Contracts") have been identified as related party
transactions under Rule 13 of the AIM Rules, however, were not
identified as such at the time:
Contract 1 - Facility Agreement and related contracts
As previously announced on 5 January 2017, the Company entered
into an agreement with SAHL for the provision and operation of
three-wet leased aircraft on a full aircraft capacity and related
maintenance, crew and insurance services ("ACMI") basis over a
period of five years, at a pre-agreed hourly rate of $1,800 (the
"Facility Agreement"). The Facility Agreement was entered into
before SAHL became a Substantial Shareholder in the Company and,
accordingly entry into the Facility Agreement did not constitute a
related party transaction.
The Facility Agreement, covering 32,000 flight hours at $1,800
per hour flown, over the five-year term, was valued at $57.6
million. The Company agreed with SAHL that it would settle $19.2
million of this commitment via the immediate issue to SAHL of new
ordinary shares in the Company. The remaining $38.4 million would
be paid by the Company in cash as the monthly services were
provided by Solenta to the Company over the term of the Facility
Agreement.
To operationalise the Facility Agreement, and deploy the three
aircraft into service, certain subsidiaries of the Company entered
into separate agreements with Solenta including:
1. On 1 July 2017, a master aircraft lease agreement between
fastjet Zimbabwe and SAHL in relation to the dry lease of three
aircraft, together with supplemental lease agreements for two of
the three aircrafts on 1 July 2017 and 6 July 2017, respectively
(together, the "Zim Dry Lease Agreements");
2. On 28 July 2017, a master services agreement between fastjet
Zimbabwe and Solenta Aviation, in relation to the provision of the
line maintenance, crew and insurance services ("CMI") on each of
the three aircraft (the "Operational CMI Services Agreement " );
and
3. On 1 November 2017, a master aircraft lease agreement and
supplemental lease agreement between fastjet Africa (Pty) Limited,
a Group subsidiary and SAHL in respect of the third of the three
aircraft for deployment into Mozambique rather than into Zimbabwe,
as initially envisaged under the Facility Agreement - see more
below under the heading Contract 4 - Supply of Services
Agreement(together, the " Moz Dry Lease Agreement" and together
with the Zim Dry Lease Agreements, the "Operational Dry Lease
Agreements").
After SAHL became a Substantial Shareholder in the Company, but
before executing the Zim Dry Lease Agreements and the Operational
CMI Services Agreement, the Company successfully negotiated a
variation in financial terms with Solenta Aviation specifically
focused on an increased aircraft and flight utilisation profile
from an expected 175 flight hours per aircraft per month, to a
revised increased 250 flight hours per aircraft per month. The new
financial terms effectively reduced the overall effective cost of
the total Facility Agreement from $1,800 per hour flown to $1,330
per hour flown, for each of the three-wet leased aircraft. The
renegotiation of the cost per hour flown, executed through the
Operational CMI Services Agreement was a related party transaction
under Rule 13 of the AIM Rules but was not identified as such at
the time. The Operational Dry Lease Agreements are not considered
related party transactions under Rule 13 of the AIM Rules.
As part of the equity refinancing that was announced by the
Company on 16 November 2018, the Company acquired four Embraer 145
Aircraft (the "Embraer Aircraft") from SAHL for additional equity
in the Company as part of a wider equity investment by SAHL (the
"Solenta Investment"). Three of the Embraer Aircraft acquired were
the subject of the Operational Dry Lease Agreements in place and
accordingly these agreements were terminated on completion of the
equity refinancing. The Solenta Investment was a related party
transaction under the AIM Rules and was the subject of a fair and
reasonableness opinion given at the time.
Contract 2 - Aircraft Maintenance Services Agreement
Following the acquisition of the Embraer Aircraft, one of the
four aircraft was deployed operationally into the Company's FedAir
business utilising FedAir's operating licence in South Africa
("Embraer ZS-BBD"). FedAir and Solenta Aviation entered into an
agreement on 5 June 2019 for the provision of maintenance services
by Solenta Aviation which included the aircraft continued
airworthiness (" CAMO ") and all required line maintenance and
repairs for the Embraer ZS-BBD (the "FedAir Aircraft Maintenance
Agreement"). The FedAir Aircraft Maintenance Agreement was
effective from 1 July 2019 for an initial term of one year at an
agreed minimum monthly rate of $43,795, together with a variable
per hour maintenance rate linked to flight utilisation. Under the
FedAir Aircraft Maintenance Agreement, Solenta Aviation charged
FedAir an amount of $306,565 in aggregate. The FedAir Aircraft
Maintenance Agreement was a related party transaction under Rule 13
of the AIM Rules but was not identified as such at the time.
Contract 3 - Amendment to the Operational CMI Services
Agreement
Following the acquisition of the Embraer Aircraft, fastjet
Zimbabwe entered into an amendment to the Operational CMI Services
Agreement with Solenta Aviation on 1 July 2019 for the provision of
maintenance only services (no crew or insurance) for two of the
Embraer Aircraft that were operating in Zimbabwe (the "Amendment to
the Operational CMI Services Agreement"). There was no change to
the length of the term of the Operational CMI Services Agreement,
however, there was an amendment to the costs payable by fastjet
Zimbabwe under that agreement due to the changes to the services
provided. It was agreed that for the two Embraer Aircraft operating
in Zimbabwe, Solenta Aviation would be paid an aggregate amount of
$238,816 per month, covering all CAMO required and all line
maintenance costs (labour and spare parts, based and supported from
Harare Zimbabwe) for a minimum included 500 flight hours per month
(effective cost of $477 per flight hour). Any hours flown over the
500 hours would then be charged at a cost of $315 per flight hour.
In the period from 1 July 2019, the date the Amendment to the
Operational CMI Services Agreement was executed, to 31 March 2020,
when full flight services ceased due to the COVID-19 pandemic,
Solenta Aviation has charged fastjet Zimbabwe an amount of
$2,149,344 in aggregate for CAMO and complete line maintenance
services. The Amendment to the Operational CMI Services Agreement,
which changed and reduced both the services previously provided and
costs payable under the Operational CMI Services Agreement, was a
related party transaction under Rule 13 of the AIM Rules but was
not identified as such at the time.
Contract 4 - Supply of Services Agreement
On 29 September 2017, the Company announced that, as part of its
growth initiatives, it would expand into South Africa and
Mozambique.
On 1 November 2017, the Company subsequently moved one of the
three wet-leased aircraft ("Embraer ZS-BBM"), covered under the
above-mentioned Facility Agreement and the Zim Dry Lease
Agreements, to be based and operated in Mozambique. This change in
jurisdictional deployment from Zimbabwe to Mozambique necessitated
new contractual lease arrangements which were concluded in the Moz
Dry Lease Agreements referred to above.
At the same time, fastjet Mozambique also entered into an
agreement with Solenta Mozambique whereby Solenta Mozambique would
provide fastjet Mozambique with non-ACMI support services for the
Embraer ZS-BBM which included overall airline management, direct
operational cost accounting, payment and reclaim from fastjet
Mozambique, fuel management and other non-ACMI specific services
such as accommodation, transport, and logistics support in country
for the crew and engineers based in Mozambique (the "Moz Supply of
Services Agreement").
The term of the Moz Supply of Services Agreement was for a
period of one year and, after that, the services would continue to
be supplied unless the agreement was terminated by one of the
parties giving the other at least three months' notice. The monthly
charge under the Moz Supply of Services Agreement, covering
non-ACMI related services, was $74,450 per month and covered the
Embraer ZS-BBM for initially operating a minimum of 250 hours per
month (effectively $298 per flight hour over and above the Facility
Agreement ACMI). During the 18-month period between 1 November 2017
and 30 April 2019, Solenta Mozambique charged fastjet Mozambique an
amount of $1,340,100 in aggregate. The Moz Supply of Services
Agreement was a related party transaction under Rule 13 of the AIM
Rules but was not identified as such at the time.
The Moz Supply of Services Agreement was terminated in April
2019 as the Company began to scale back its frequency on several
routes in Mozambique to mitigate future losses following the
increased competition in the local Mozambique market and the
reduced demand due to two category 5 tropical cyclones at the
beginning of 2019.
Contract 5 - New Supply of Services Agreement
Following the termination of the above mentioned Moz Supply of
Services Agreement in April 2019, fastjet Mozambique entered into a
new agreement with Solenta Mozambique whereby it would provide a
reduced set of services including crew, line maintenance, insurance
and all other non-ACMI airline support services, for a new reduced
flight schedule of only 47 flight hours, at a fixed monthly rate of
$69,105 ($1,470 per flight hour) (the "New Supply of Services
Agreement"). The New Supply of Services Agreement was a related
party transaction under Rule 13 of the AIM Rules but was not
identified as such at the time. The New Supply of Services
Agreement was terminated on 26 October 2019 and with services
supplied under the agreement ending on 30 November 2019, after the
Company suspended all its flight operations in Mozambique. During
the period between May 2019 and November 2019, Solenta Mozambique
charged fastjet Mozambique an amount of $483,735 in aggregate.
Contract 6 and Contract 7 - Aircraft Heavy/Base Maintenance
Following the acquisition of the Embraer Aircraft by the Company
in December 2018, the Company assumed all responsibility for the
Embraer Aircraft and their ongoing maintenance and operational
requirements. Under the above Contracts 3, 4 and 5, the Company
sub-contracted its line maintenance and monthly continued
airworthiness ongoing maintenance requirements to Solenta. However,
the Company remained responsible for the aircraft heavy or base
maintenance requirements, such as engine and/or APU restorations
and shop visits, landing gear set overhauls (due every 12 years),
airframe calendar and/or flight hour or flight cycle checks
(collectively "Heavy/Base Maintenance"). The airframe checks
(calendar, flight hour or flight cycle) are completed generally
every 30, 60, 120 months, or every 5,000 flight hours or 5,000
flight cycles.
For two of its Embraer Aircraft purchased, the Company entered
into two separate agreements with Solenta Aviation for Heavy/Base
Maintenance, which involved various levels of the above-mentioned
heavy checks. Aircraft operators are required by law to have base
maintenance contracts in place for all aircraft which they
operate.
The first agreement was for Heavy/Base Maintenance on aircraft
ERJ145LR, MSN 145607 and registered Z-FJF, with work commencing on
10 May 2019 ("Base Maintenance FJF"). The cost of check inspections
labour was pre-agreed at a fixed fee of $32,000. Following the
inspections, and the rectification of the defects detected during
the inspection checks, together with all parts and sub-contracted
repairs required, an additional $332,145 was charged and paid to
Solenta Aviation in respect of the additional labour, spare parts
and sub-contracted work. The total final check cost was
$364,145.
The second agreement was for Heavy/Base Maintenance for aircraft
ERJ145LU, MSN145242, and registered ZS-BBD, where work was
scheduled to commence on 23 March 2020 ("Base Maintenance BBD").
The cost of the check inspections labour was pre-agreed at a fixed
fee of $89,204. It was agreed that Solenta Aviation would charge
fastjet Zimbabwe (as owner of the aircraft) three prepayment
deposit invoices of $100,000 each ($300,000 combined) towards the
complete check and labour, spare parts, sub-contracted work, and
that when the final check was completed, the actual costs would be
balanced back to the prepayment. An amount of $200,000 has been
paid to date to Solenta Aviation. Although the completion date of
the maintenance work was expected to be 18 May 2020, due to the
COVID-19 outbreak, the work has not yet been completed and is
currently scheduled to complete at the end of July 2020 (work is
currently in progress to complete the required checks).
Both the Base Maintenance FJF and Base Maintenance BBD
agreements were related party transactions under Rule 13 of the AIM
Rules but were not identified as such at the time.
Contract 8 - Charter Services
On 30 January 2020, fastjet Zimbabwe entered into a formal
agreement with Solenta Aviation for the ad-hoc supply of an ACMI
charter aircraft (aircraft equivalent to the Embraer Aircraft owned
by the Company) (the "Ad-Hoc and Sub-Charter Contract"), to support
operational breakdown , extended operational delays and/or short
term maintenance requirements on the Company's own operational
fleet. fastjet Zimbabwe and Solenta Aviation agreed a charge of
$1,480 per block hour flown, for a fully supplied, crewed and
maintained operational ACMI aircraft, with no minimum monthly
commitments from the Company. The Ad-Hoc and Sub-Charter Contract
was a related party transaction under Rule 13 of the AIM Rules but
was not identified as such at the time.
During 2019, a similar agreement to the above existed whereby
Solenta Aviation provided ad-hoc ACMI charter aircraft to the
Company, but this arrangement was never documented as a formal
agreement.
fastjet Zimbabwe typically charters aircraft under the Ad-Hoc
and Sub-Charter Contract when one of its existing Embraer Aircraft
is out of service. As at 31 March 2020, Solenta Aviation charged
$537,802 in aggregate under the formal and informal Ad-Hoc and
Sub-Charter Contracts (2019: $352,240 and 2020: $185,562).
A further announcement will be made as soon as practicable once
the necessary work has been undertaken in relation to the fair and
reasonable nature of the Contracts insofar as the Company's
shareholders are concerned.
fastjet plc Tel: +27 (0) 10 070 5151
Mark Hurst, Group Interim Chief
Executive Officer
Kris Jaganah, Group Chief Financial
Officer
Liberum Capital Limited Tel: +44 (0) 20 3100 2222
Nominated Adviser and Broker
Andrew Godber
Clayton Bush
James Greenwood
William Hall
Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571
Financial PR
Angharad Couch
Toby Moore
Nick Hayns
NOTES TO EDITORS
About fastjet
Fastjet is a multi-award-winning African value airline that
began flight operations in 2012. Its awards include Leading African
Low-Cost Carrier World Travel Awards 2016, 2017, 2018 and 2019, and
Skytrax World Airline Awards Best Low-Cost Airline in Africa
2017.
Today, fastjet connects the three major cities in Zimbabwe by
flying between Harare and Victoria Falls and Harare and Bulawayo.
Internationally the airline offers flights from Harare and Bulawayo
to Johannesburg in South Africa.
In October 2018, fastjet acquired an interest in FedAir, which
provides unscheduled shuttle and charter services to the game
lodges in the Southern Africa region.
Since commencing operations fastjet has flown over 3.5 million
passengers and has established itself as a punctual, reliable, and
affordable airline, with value-added services inclusive of free
baggage allowance(s), airport lounge access, dedicated check-in and
more according to the new fare attributes introduced across their
network.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
CNTUPUBWMUPUPPR
(END) Dow Jones Newswires
July 09, 2020 02:00 ET (06:00 GMT)
Fastjet (LSE:FJET)
Gráfica de Acción Histórica
De Nov 2024 a Dic 2024
Fastjet (LSE:FJET)
Gráfica de Acción Histórica
De Dic 2023 a Dic 2024
