PRECISION AIR SEEKS DEBT FOR EQUITY SWAP WITH TANZANIAN GOVERNMENT
(Posted 20th July 2014)
After Precision Air’s annual financial statements, released last week to shareholders and the general public, showed significant improvements over the previous year, is information emerging that the airline is in talks with the Tanzanian government to swap accumulated debts for equity.
A source close to the airline has indicated that various fees and charges have piled up and , should the Tanzanian government agree to the deal, would bring significant financial relief to Precision Air.
One of the airline’s main shareholders, Kenya Airways, is also mulling the injection of further capital into Precision Air, after selling off a major percentage of its stake during the IPO in 2012. That deal however is contingent on Precision Air intensifying the turnaround from a loss maker to a profit centre.
As mentioned last week when confirming the annual financial results, are plans afoot at Precision to sell several of its ATR aircraft and then lease them back, which would return much needed cash into the company’s coffers. Other cost saving measures too are being considered, including added outsourcing of services.
Precision, besides the routes from Dar es Salaam to Zanzibar, Kilimanjaro and Mwanza, covers several secondary airports across the country and in some cases offers the only flight option to the public to reach such places on scheduled services, a concept aided by the use of ATR 42 and ATR 72 turboprop aircraft which are capable of serving airfields with shorter runway lengths.
Aviation in Tanzania has been plagued by loss making operations, with Air Tanzania a prime example, even though Precision’s main local rival on the routes to Mwanza, Kilimanjaro and Mbeya, Fastjet, is also still writing deep red balance sheets according to their last financial year results. Time will no doubt tell what measures will be taken, but Precision and the other airlines, and how successful such measures will be to return them to profit territory. Precision Air is quoted on the Dar es Salaam Stock Exchange, Fastjet’s holding company is quoted on the London Stock Exchange, making both carriers accountable under public company standards while Air Tanzania as a parastatal company is not releasing financial data to the public directly, one reason perhaps why it managed to pile up a Mt. Everest of debt which has in the past severally scared away potential investors. Watch this space for regular and breaking news from the aviation industry across the Eastern African region.
