AIR TANZANIA RISKS TO LOSE HEAD OFFICE OVER DEBT CLAIMS
Information has come to light that the head office building of Air Tanzania is currently being assessed as to its value following an order by the Tanzania High Court over an outstanding debt of over 1 billion Tanzania Shillings, which the airline has failed to pay over a car hire deal which saw Tourism Services, Leisure Tours and Holidays Ltd. supply vehicles to the company.
The company won their principal case already in 2009 but ATCL had failed to pay the debt which has since accrued compound interest.
Upon application by the creditors they now expect the airline’s head office be auctioned off to repay them, even though one official close to the airline said in a mail to this correspondent: ‘The debt is there but the cash flow of the airline over the past years was not good. First they were grounded over documentation issues from TCAA, and then they lost the B737 in Mwanza and the Q300 was also badly damaged in Kigoma. They hope that government can step in and inject capital to prevent the office block from auctioning. That would be a big setback and detrimental to the airline. They may not be able to pay the rent even considering their limited income’.
The deadline for the submission of the value is this week, so watch this space on the upcoming decision the High Court will take vis a vis a possible auction.
3 Responses
I find it surprising that this airline is struggling at a time when, according your insightful blog reports, there are so many tourism successes in the region. I’ve looked at some of the background stories, about Turkish and Qatari airline companies interested at various times, and I wonder if there is hesitation in investment from either direction that is putting pressure on T.A.? Another question I have is about the aging fleet of airliners. You suggest that the two recent accidents have had a major impact. As you may recall, I am always interested in the competitiveness of U.S. manufacturing sources. Has the recent fires to the batteries of the Boeing 787 at Japan Airlines had an impact on replacement acquisition investment decisions for the fleet at Tanzanian Airlines? If so, what are the competitive issues that are ahead for this airline in terms of upgrading — and most important — maintaining its fleet? Thank you for your fascinating reports.
This is a very complex story. Air Tanzania is by conventional standards broke and has been hoping for a foreign investor, all of whom so far shied away over the prospect of having to deal with radical unions. Old debts are massive and acquiring new aircraft, or let me be more precise, newer aircraft, is only possible on lease and in view of their general creditworthiness difficult at best.
Mismanagement in the past goes to the core of the problem, but as explained in numerous articles over the years, the rot goes deeper. They are ‘alive’ courtesy of a government which always bailed them out but never quite found the strength to sack who needed sacking, put serious money into it, install serious management and then let the airline be run commercially similar to what RwandAir has seen happening. They might stay, they might not but will in my view never be able to really reclaim the ‘national carrier’ status other than clinging to a name.
Thanks for reading my blog.
W.