Precision Airline is desperately in need of a $32 million bailout package from the government. FILE
Precision Air (PW), which was once Tanzania’s fastest growing airline, is in financial turmoil and desperately in need of a $32 million bailout package from the government.
The airline’s board chairman, Mr Michael Shirima, said they were seeking the money from various sources, including the government, to enable it to meet urgent financial obligations that include servicing bank loans and paying aircraft suppliers.
Sources said the airline had left the government to decide whether it would act as a guarantor for a bank loan or provide funds in exchange for a stake in the troubled carrier.
Mr Shirima, who founded the airline in 1993, admitted that PW was going through tough times because of huge debts accumulated after it ordered seven aircraft worth $136 million from the France-based French-Italian aircraft manufacturer Avions de transport regional (ATR) in 2007.
The debt ballooned because the anticipated cash flow after the company listed on the Dar es Salaam Stock Exchange in 2011 did not materialise.
“We expected pension funds to buy shares but, to our surprise, they didn’t,” Mr Shirima said.
“Our cash flow is now constrained. The audited accounts for 2012 will be out any time from next week and for the first time we are going to post a loss.”
Mr Shirima said spiralling fuel prices, high taxes and levies and currency fluctuations had also contributed to the airline’s troubles.
“Fuel is hurting everybody in the aviation sector. Fuel constitutes about 40 per cent of operating costs. The problem was compounded by the leasing of three Boeing 777s, which have since been returned to their owners.”
The giant twin-engined jets were leased to serve regional routes between Dar es Salaam and Nairobi, Entebbe, Lusaka, Lubumbashi, Johannesburg and other destinations under an expansion programme the airline unveiled last year.
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