The Aim-listed carrier said it had signed a deal with Don Smith, the head of Five Forty Aviation, that both sides said puts the falling-out behind them.
Smith, who will remain at the helm of the Kenyan business, said in a statement that the terms of the memorandum of understanding were confidential, but “I feel vindicated and I’m glad this has been resolved”.
Fastjet last month threatened to take Smith to court, claiming he was refusing to hand over papers as part of the firm’s purchase of the majority of Fly 540.
Smith hit back, arguing he had not been paid in full for his stake.
The company said in a statement: “Both Fastjet and Don Smith are pleased to be putting the unfortunate, highly publicised events of the past few months behind us. Don Smith remains the CEO of the Kenyan business and we are pleased to have him as part of the Fastjet/Fly540 team.”
Fastjet floated on Aim last year with the intention of setting up a low-cost pan-African airline.