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Private Tanzanian airline reports profit despite difficult economic situation

Precision Air, Tanzania’s only airline of choice, recorded a good performance in the 2011/12 financial year despite the turbulent economic situation that affected air transport globally during the period, the airline’s chief executive, Alfonse M. Kioko, said here Wednesday.

“We have managed to navigate through the stormy weather and posted some profit when many airlines were making losses,” Kioko told the airline’s shareholders at their first annual general meeting since the company floated its shares in an initial public offering (IPO) on the Dar es Salaam Stock Exchange (DSE) last year.

“The year saw significant upward pressure in jet fuel prices against a backdrop of a sluggish performance of the world economy,” he said, noting that the airline’s fuel bill increased by 132 percent to Tanzanian shillings 48 billion (US$1=Tsh 1,570).

Meanwhile, the Euro zone crisis and the slowdown in the US economy resulted in downward pressure on the demand for air transport, especially from the tourist market which accounts for approximately 50 percent of the airline’s domestic and regional sales.

“The end result has been what many describe as the ‘CEO’s nightmare’ – a condition where revenues are increasing but the costs are increasing at a much higher rate than the revenues,” Kioko explained.

During the last financial year, ended 31 March 2012, Precision Air carried 825,159 passengers, a growth of 24 percent, compared to the previous year’s figure of 666,537.

According to the independent auditors’ report presented to shareholders by Ernst & Young, Certified Public Accountants, the airline’s revenue passenger per kilometre achieved from the market amounted to 424 million shillings, against previous level of 318 million shillings – a growth of 33 percent.

While Kioko pledged a continued focus on “improving productivity and customer service to retain and grow the market share,” airline’s Board Chairman Michael N. Shirima urged the Tanzanian public to patronise the private carrier that he founded in 1993 as a private charter air transport company, operating a five-seater light piston-engine aircraft.

Encouraged by a free-market economy that evolved in Tanzania towards the end of the 1990s, Precision Air ventured into operating scheduled flights with a fleet of small planes.

Precision Air has since grown to be a leading airline not only in Tanzania but in Africa. Its significant milestone was in 2003 when Kenya Airways acquired a minority 49 percent shareholding.

The airline was listed on the DSE with a total of 7,056 investors, most of them Tanzanian nationals and corporate entities, who took part in the IPO.

Currently, Tanzanians own 57.94 percent shares in the company, 41.23 percent for Kenya Airways while one percent stake is in the hands of other nationals.

“The company is incorporated and domiciled in Tanzania. Together with that, majority shareholding and control being within the country, it is the second national carrier under the definition of the International Civil Aviation Organization. Therefore, there is reason for the community to give it the necessary support,” Shirima told the meeting.

Cash-strapped Air Tanzania, which is a wholly government-owned enterprise, was grounded some months ago after all its aircraft became unserviceable.

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