fastjet has completed the signing of a memorandum of understanding with local South African investment company Blockbuster, with the objective of fastjet operating services in South Africa by the end of May 2013.

Blockbuster is associated with a number of high profile South Africans including, Edward Zuma, son of president Jacob Zuma, and businessman Yusuf Kajee.

It is anticipated that the new entity will be 75 per cent owned by Blockbuster, in compliance with South African law, and 25 per cent owned by fastjet. 

Tickets could go on sale within a few weeks and fastjet is targeting May 31st to launch the initial Johannesburg to Cape Town route.

The company has received legally binding commitments to raise £2 million by way of the issue of 160 million new ordinary shares at a price of 1.25 pence per share.

These shares will rank pari passu in all respects with existing ordinary shares of fastjet. 

Commenting on the announcement, fastjet chief executive Ed Winter said: “We believe that the operating agreements in place between Blockbuster and Federal Air represent a great opportunity for fastjet, our local investors, our partners at Federal Air and most importantly, the South African public.

“Though we have been in talks with a number of companies regarding licensing arrangements, we have ultimately decided that in order to best serve South African customers, we should invest not in the past, but in the future.”

The latest move follows a decision to abandon a planned tie up with bankrupt the 1time airline.

Fastjet is the second company with plans to start a low-cost carrier within the coming months.

It joins Skywise, which is being promoted by 1time’s founders, in a race to service the gap in the market created by 1time’s demise.