Fastjet, the African budget airline start-up backed by easyJet founder Sir Stelios Haji-Ioannou, faces having aircraft repossessed in a dispute over unpaid leasing bills in Tanzania, according to a report today.

Canada-based Avmax Aircraft Leasing has written to the airline saying it was removing the registration of three aircraft leased by its Tanzanian operation.

The aircraft, flying under the Fly540 brand, have allegedly run up unpaid leasing and maintenance bills of almost $2 million, the Daily Telegraph reported.

The letter from Avmax vice-president Don Parkin, headed “Notice of De-Registration”, notified “Fly540/Fastjet of its continuing default” under the lease terms.

It added: “As such, the lessor has elected to deregister the aircraft from the Tanzanian Civil Aviation Registry.”

The letter sent last month said the deregistration would “be commenced immediately”.

The letter followed a warning in November that Fly540/FastJet was in default and continuing “to refuse and neglect your financial obligations”.

Avmax claimed the airline had undertaken to pay $150,000 per month for the rental and maintenance of the aircraft.

It was sent to FastJet’s chief financial officer Angus Saunders and Don Smith, the majority owner of Five Forty Aviation, which has a separate £4.4 million legal dispute with the London-listed FastJet, according to the newspaper.

Five Forty Aviation alleges FastJet has failed to honour a deal to repay debts that the company guaranteed with Chase Bank in Kenya – a claim FastJet refutes.

FastJet denied it owed Avmax anything, saying: “There has never been a contractual arrangement between Avmax and FastJet and therefore FastJet does not owe any money to Avmax.

“Don Smith, through Fly540 in East Africa entered into contractual relationships with Avmax and under these commercial arrangements owes money to Avmax for unpaid aircraft lease rentals and maintenance reserves.”

A spokesman for Smith denied this, saying: “The admission document for the listing of Fastjet on AIM states that it owns 90% of Fly540 Tanzania through its acquisition of Lonrho Aviation (BVI) Ltd.

“As such, the action taken by Avmax against Fly 540 Tanzania has no implications for Five Forty Aviation or its chief executive, Don Smith.”