Budget Airline Operator Fly 540 Could Collapse Soon Due to Massive Debts

Mr Don Smith

Fly 540/FlySax Group is facing an avalanche of demands from auctioneers who are threatening to impound and auction off assets including a luxury jet that was once used to fly late South African President Nelson Mandela

Fly 540 is said to have been facing serious financial challenges even before the eruption of the Covid-19 pandemic in late 2019

Operations at budget passenger and cargo airline Fly 540 and its sister company East African Air Safaris (FlySax) could soon grind to a halt due to massive financial challenges currently gripping the company. The carrier is said to have been facing serious financial challenges even before the eruption of the Covid-19 pandemic in late 2019. The outbreak of Covid-19 and the subsequent lock-downs that followed drove the twin company into deeper financial trouble, saddled with massive un-serviced loans.

Mr George Kivindyo

Impeccable sources within the company who requested not to be named because of the sensitivity of the matter and for fear of reprisals said: “The current state of affairs has triggered huge cash flow problems and in the process adversely affected the day to day operations of the company with serious consequences.”

The owners are said to have used company assets including planes as collateral to secure massive loans, the money was then used to buy shares in the struggling South African Airways

At the moment Fly 540/FlySax Group is facing an avalanche of demands from auctioneers who are threatening to impound and auction the group’s assets including a luxury jet that was used to fly late South African President Nelson Mandela, the aircraft is currently used exclusively for executive charter flights.

The owners are said to have used company assets including planes as collateral to secure massive loans from local and international financial institutions which was then used to buy shares in the struggling South African Airways. The directors are then said to have abandoned local operations to concentrate on reviving domestic routes in South Africa. The Weekly Vision tried to reach out to the Principal shareholder and Managing Director Don Smith of Fly 540 and George Kivindyo but there was no response as they were reportedly holed up in South Africa.

The airline has failed to pay her employees in Kenya for months now as they have no money. The employee including members of the board of directors, top managers, Pilots and grounds crews have threatened to quit the company in frustration.

Servicing the planes and even paying for the fuel to stay in the air has become a tall order. ” The situation is so bad to the extent that even paying the salary and allowances of the chairman Charles Wako became impossible, whenever the managing directors set their eyes on Mr Wako, they would run away because they had no explanation to give. Source at the airline told us that  suppliers have declined to advance jet fuel to the company on credit as in the norm in the industry, they must pay cash, and so are the pilots who are paid in cash weekly.

The result is that Mr Wako, brother to Senator Wako quit in a huff a few months ago. Another senior manager who also declined to be named for the same reasons said the airline is now saddled with planes that are un-air worthy, operating un-worthy aircraft is a very dangerous matter as we all know.  

Other domestic operators have raised serious concerns as to why the company has been allowed by the Kenya Civil Aviation Authority (KCAA) to continue operating using un-air worthy planes in total contravention of aviation regulations and requirements. They have called for the immediate suspension of the airline

The manager said: “As a matter of fact the entire fleet is supposed to be grounded for extensive servicing and fresh clearance by KCAA and IATA to be allowed to get back, otherwise there is a great danger facing the passengers using the flights and the crews operating them.”

KCAA Director Aviation Safety Security and Regulation Nicholas Muhoya said the authority had received safety concerns for the said aircraft and it is in the process of taking appropriate action to avoid any possible air disaster. “We are aware of these concerns and the matter is within our hands and we are going to take appropriate action in the immediate future and that is all I can tell you about this matter,” said Muhoya.

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