Excalibur weighing options on its pursuit of 1Time
Excalibur Aerospace, the investor that is buying a 29,6% stake in low-cost airline 1Time Holdings, has given itself four to six months to decide whether to make an offer for control of 1Time as part of a plan to consolidate its airline investments.
Becoming the largest 1Time shareholder will complicate life for Excalibur as the company also owns a 74% stake in competitor carrier Velvet Sky which it acquired in June. Velvet has two aircraft and flies between Cape Town, Durban and Johannesburg.
"Competition is very good and very healthy," Excalibur chairman Stephen Nthite said in an interview, Tuesday, 20 September 2011. "In the short to medium term they will have to slug it out, we are not going to protect Velvet."
"We have given ourselves four to six months to take a final decision on two issues," Mr Nthite said. "Are we going to want to push our share in 1Time to becoming a majority shareholder that will trigger a compulsory offer to minorities, and if we are going to do that, it will make sense for the two companies to be consolidated", he said.
Without a merger between the two airlines Excalibur would like to see Velvet focusing on growing its market share in SA's golden triangle alongside 1Time, and for 1Time to increasingly extend itself north of SA, becoming a low-cost regional airline. This strategy is dependent on 1Time being able to achieve greater cost-savings and operational efficiencies, which is linked to the carrier's ability to renew its fleet to more modern and fuel efficient aircraft.
Glen Orsmond, founder and outgoing CEO of 1Time, said Excalibur had shared its vision of wanting to create an African airline using 1Time as a platform for expansion and growth into the rest of the continent.
Mr Orsmond is one of the directors to sell a large part of his stake in the business to Excalibur in the R37,4m deal that was announced earlier this week.
Excalibur is a privately-owned black empowered company with a confidential shareholding agreement, Mr Nthite said.
The transaction with 1Time came after Excalibur did an analysis of the company's competitors and it emerged as a company "with great potential" that it was not able to pursue because of its inability to access the capital it needed to be able to compete in an environment of weak demand and increasing fuel prices, Mr Nthite said.
"We have the ability to access cash from our shareholders quicker than a normal business," he said. Excalibur is able to access funding "of R300m and even more than that", he said.
Source: Business Day
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