Precision Air reports a USD18.9 million loss for FY2013 due to overly ambitious growth

Tanzania's largest carrier, Precision Air has belatedly reported a TZS30.5 billion (USD18.9 million) loss for the financial year to 31-Mar-2013, compared to a TZS633.8 million (USD392,814) profit in the year prior. The poor result is largely due to Precision's over-ambitious expansion during FY2012 which saw the carrier lease three Boeing 737-300s to operate regional routes, including Dar es Salaam to Johannesburg.

The situation has been compounded by a disappointing initial public offering in Nov-2011 which raised less than half the TZS28 billion (USD17.3 million) sought to pay for Precision's fleet and route expansion plans. The carrier listed on the Dar es Salaam Stock Exchange (DSE) in Dec-2011. The arrival of LCC fastjet on two key domestic routes, forcing down fares, has also had an impact.

Precision is now urgently seeking a USD32 million bailout from the Tanzanian Government and other investors to meet bank and aircraft loan payments. A request to the government for a USD4 million capital injection was reportedly rejected earlier this year. But the government could be persuaded to take an equity stake in Precision to ensure air access to outlying regions is maintained.