Thursday, October 4, 2012

■ TANZANIA: Precision Air posts USD400'000 profit despite tough market conditions.

Precision Air Tanzanian private carrier Precision Air (PW) yesterday presented its  Ernst & Young audited report for the Financial Year 2011/2012 to shareholders, marking the airline's first annual general meeting since the company floated its shares in an initial public offering (IPO) on the Dar es Salaam Stock Exchange (DSE) in November of last year.

Speaking at the presentation, the airline’s Chief Executive, Alfonse Kioko stated that whilst the company's traffic and revenue had increased dramatically over the last year, its overall net profit had been eaten away by high fuel prices:
Our fuel bill increased by 132 per cent to a figure of USD30.5million (TSh48billion),’ Mr Kioko said adding “this development is quite significant as fuel constitutes a major cost component in our operations.” Mr Kioko termed the situation as a “CEO’s nightmare” a situation where revenues are increasing but the costs are increasing at a much higher rate than revenue.

Precision Air's Caravan in 1993
Precision Air's Caravan in 1993
Numberswise, the airline carried 825'159 passengers, a growth of 24%, compared to the previous year’s figure of 666'537, whilst its revenue Passenger Per Kilometre realised from the market, grew by 33% to USD275'000 (TSh424million), against previous level of USD202'500 (TSh318million). Overall, PW posted a profit of USD403'000 (TSh634million), a growth of 13% on Financial Year 2010/2011

On the issue of spiralling oil prices, Precision Air Financial Director, Charles Ogolla, later stated that the carrier is currently in negotiations with various banks to sign fuel hedging contracts in order to cushion it from any future hikes.

PW's founder and Board Chairman, Michael Shirima, then took the opportunity to urge the Tanzanian public to patronise the private carrier he had founded in 1993 as a private charter air transport company, operating a five-seater light piston-engine aircraft. 

Precision Air's continued growth from strength to strength has resulted in some calls for it to be declared Tanzania's national carrier, though the Tanzanian Government has remained steadfast in its desire to see ailing flag carrier Air Tanzania (TC)  return to the skies, this time, bailing it out to the tune of USD3.1million.