Initial Public Offering Gets off the Ground
Precision Air's IPO finally gets take-off clearance
(eTN) - Regulatory authorities in Tanzania have finally bowed to increasing pressure to allow Precision Air, a privately-owned airline of Tanzania and partner of Kenya Airways, to go ahead with their long-planned and often-halted initial public offering (IPO) of shares. Government in Dar es Salaam had come under intense scrutiny, because on one hand it was making verbal statements as to attracting investments in the aviation industry – most recently during the opening of the aviation conference last week in Dar es Salaam by President Kikwete – and yet placing hurdle after hurdle in the way of Precision Air in a wide range of areas. Foul play was suspected when upon the opening of the airline’s maintenance facility at the Julius Nyerere International Airport in Dar, no taxiway had been linked to the multi-million US dollar investment by the Tanzania Airports Authority, as was during the airline’s long struggle to attain the status of "self handling," allowing it eventually to escape the greedy clutches of a handling monopolist.
The halt of the IPO earlier this year was reportedly linked to what was generally perceived as a frivolent and politically-motivated, winding-up petition against Precision Air over an alleged debt of some US$100,000, prompting the Dar Stock Exchange to throw the book at the airline claiming it could not proceed with the sale of shares while winding-up proceedings were ongoing.
Tanzania’s mainstream politicians, many of them mentally rooted in the command economy days, also played a part in constantly demanding that government revive the near dead Air Tanzania and only recently was a huge maintenance bill paid on ATCL’s behalf to get a Bombardier Q300 aircraft back into operations, a single turboprop plane compared to the many recently acquired ATRs and jets of Precision.
Kenya Airways being a key partner of Precision also reportedly fueled sentiments against Precision, inspite of Kenya Airways' expressed desire to reduce their current shareholding of 49 percent to approximately a third of the shares during the IPO.
Yet, all is well that ends well as Precision apparently got final permission to launch their IPO within weeks of this announcement in October, setting the stage of a major boost for the Dar Stock Exchange and injecting added capital into the airline at a time when it is clearly set on an aggressive expansion course.
Meanwhile, the airline has taken delivery of another B737, which will be deployed on the route between Nairobi to Dar and between Dar and Mwanza, bringing the total number of aircraft operated to 11. Precision has already announced that they intend to add a further 6 planes between now and the end of 2012, affirming its status as Tanzania’s number one airline, connecting the country domestically, regionally, and across the continent of Africa.