Air Tanzania carries a mountain of legacy debts

AIR TANZANIA IN 133 BILLION DEBT TRAP

(Posted 21st June 2014)

Accumulated legacy and current debts of at least 133 billion Tanzania Shillings are a detrimental factor for the development of the airline was parliament in Dodoma, Tanzania’s political capital told during the week by the Deputy Transport Minister, when he answered questions raised about state of affairs of ATCL.

The airline presently only operates two planes, a recently acquired Bombardier CRJ200 and a Bombardier Q300 turboprop, and inspite of assurances that more planes would be sourced this has not yet happened. The minister also told parliament that plans did exist to procure two Embraer e-jets of E170 and E190 makes in addition to at least two Chinese built Y12’s. How government however was planning to settle the debts was not answered, casting doubts over the option to eventually find a strategic investor again, as they would expect to find a debt free company to put their money into and not be saddled with legacy issues of the kind Fastjet encountered with the acquisition of the Fly 540 operations in Tanzania.

Aviation observers also took immediate issue with the announcement that ATCL should get two Chinese built Y12 20 seater aircraft, commenting that the more proven DHC 6-400 Twin Otter was a truly state of the art aircraft which has been operating in the region for the past three decades through earlier models and was thought to be more suitable, alternatively pointing to the Czech built LET 410, also a 19 seater which was equally widely used in East Africa. No comment could be sources from Air Tanzania, which has in the past remained silent over the level of legacy and current debts incurred and on the books.

Other operators voiced their ongoing concern that constant bailouts and subsidies to the loss making national airline tilted the playing field and allowed for distorted competition, an allegation in the past denied by government sources but generally thought to be the correct assessment of the aviation industry in Tanzania.

Watch this space for breaking and regular aviation news covering the entire Eastern and Central African region and the Indian Ocean islands.

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