Is All Rosy In The FlyAfrica Camp?
The July 2014 launch of FlyAfrica, a low-cost airline based in Zimbabwe came as a huge relief to the nation. The airline launched just at an opportune time when there was a huge gap left by the struggling Air Zimbabwe. Even their specials were amazing too! Imagine they penetrated the market with jaw-dropping specials like $9 trips to Victoria Falls. FlyAfrica quickly became a little piece of heaven on earth.
And then the music stopped……
The business that was doing well suddenly turned south in October 2015 and from then things just got dirtier. But before going downhill, what were the events leading to that?
When FlyAfrica took off the ground there was a 49/51 joint-venture between flyafrica Ltd, a Mauritius-based investment vehicle, and Nu.com (Pvt) Ltd, a Zimbabwean company owned by the politically-connected Chakanyuka Karase.
The partnership ended prematurely and very bitterly towards the end of 2015 when flyafrica Ltd filed serious fraud and theft charges totalling more than USD$140, 000 against a Karase family member. Soon after the fraud charges, they suspended Nu.com as its local partner for breach of directorial and fiduciary duties. This stirred the hornet’s nest and in retaliation Karase then surrendered the airline’s Air Operator`s Certificate to the Civil Aviation Authority of Zimbabwe (CAAZ). Obviously, the Zimbabwean Civil Aviation Authority had no choice but to suspend the airline`s license until their house was back in order.
And it gets more complicated….
Following the suspension of the airline`s license by CAAZ, flyafrica Ltd then exercised a default call-option in the Nu-Aero shareholder’s agreement that required Nu.com to sell to flyafrica all its shares within the time frame stipulated in the clause. Karase ignored that notice and the Mauritian firm automatically assumed ownership of its shares. Following the debacle, flyafrica Ltd’s parent, flyafrica Holdings, sold Nu-Aero to another Zimbabwean firm called Low-Cost Enterprises (Pvt) Limited. This Zimbabwean company is the one that has been trying to relaunch the airline under the Fly Africa Zimbabwe brand.
As the Karases fight back……
Following this move by flyafrica Holdings, Karase and Nu.com recently threw a punch back and applied to the High Court of Zimbabwe to seek a declaratory order which, if given, would confirm that Nu.com (their company) is still the 51% shareholder in Nu-Aero and therefore part of the new Fly Africa Zimbabwe venture.
Karase and his company claim that they never sold their shares to Flyafrica Ltd and argue that such a suggestion “is untrue, unlawful and mischievous”. They also allege that the take-over did not comply with Zimbabwe’s Companies Act legislation as well as the Constitution of Zimbabwe.
The fight between the Karase family and FlyAfrica Holdings continues to thicken each day. Swords have been drawn out and they are vying for each others` blood.
Money gone down the drain?
Maybe. One wonders if the current wrangles and brawls within the troubled airline can just be solved by money. Perhaps if the parties currently at loggerheads would just share whatever spoils that are left of the airline then maybe everyone would call it quits and step out of the boxing ring. Sadly that has not been the case with the airline and its investors. Despite the recent injection of a US$8 million into the airline, the fights continue to turn nastier and the carrier has yet to fully commence operations. One of the airplanes that the airline was using, a Boeing 737-500 (registration ZS-TGY) which was wet-leased in July this year, has since been returned to its South African lessor, Africa Charter Airline. No commercial services have been operated since then.
So, Is It Game Over?
Certainly not. As yadley.com, we believe that FlyAfrica will rise again sooner than expected.
We are aware that the new Zimbabwean C.E.O of the airline, Mr Cassidy Mugwagwa has a great vision for its resurrection and sustainability. Fly Africa`s resurrection is overdue. We are at a time when the nation of Zimbabwe and the entire continent at large are in desperate need of improved and affordable aviation connectivity. Once it successfully takes off the ground again, we feel that FlyAfrica Zimbabwe will grow rapidly if it remains consistent with its product, if it flies on time and if it operates modern aircraft.
“For there is hope for a tree, if it be cut down, that it will sprout again, and that its shoots will not cease” – Job 14 verse 7