Kenya Airways (KQ) is looking become the majority stakeholder in the Tanzania airline, Precision Air (PW), by increasing its stake from 41.5% to 49% through a proposed USD 10 million cash injection into the Tanzania air carrier.
In a recent interview with The EastAfrican, Sauda Rajab, chief executive of Tanzania Precision Air, explained that, while the proposed injection is still subject to approval by a number of bodies, the move represents a step in the airlines ongoing turnaround efforts
“Our ongoing turnaround efforts will give us relief and enable the company to pay off its longstanding debts,” she said.
The proposed injection, which includes a condition that Precision air either sell or lease back five of its remaining nine airlines, will allow the airline to continue the restructuring program that has helped it to reduce its direct expenditures from USD 88.4 million to USD 59.5 million and its indirect expenditure from USD 26.7 million USD 23.4 million and has resulted in a posted full-year operating profit of USD 2.21 million during the latest Financial Year.
According to Manzi Rwegasira, an investment banker and independent board director at Precision Air, who also recently spoke with The East African, the Tanzania airline will need to focus on managing its financing costs to ensure that the airline is once again profitable.
“The company needs to be cautious of fuel costs, which account for a significant amount of all airlines’ operating expenses,” he said. “The outlook is, nonetheless, positive.”
Precision Air, which was founded in 1993, is currently negotiating with the Government of Tanzania to exchange equity for USD 9.6 million in unpaid landing fees and other taxes.