Precision air announces annual financial results

Precision Air, Tanzania’s only airline quoted on the Dar es Salaam stock exchange, has just announced their annual result for the financial year which ended on March 31.

While legacy liabilities and other extraordinary one-off factors, the company saw an overall remain in the loss-making territory, with an improved bottom line from last year’s record red figures of Tanzania shillings 30.1 billion to just 12.1 billion.

However, an operating profit of 3.6 billion TShs compares very favorably with the loss of the previous accounting period of 18.1 billion, an improvement of over 120 percent year on year, evidence that the turnaround of fortunes for Precision is well underway.

With some of the cost-saving measures initiated by the current management team under Ms. Sauda Rajab only expected to show a full impact during the 2014/15 financial year, it is expected that the airline will return to the profit territory either at the end of this or in the following accounting period. For this year, direct expenditure cost savings of 48 billion Tanzania shillings were confirmed, while indirect expenditure cost savings were pegged at 5.6 billion TShs, the latter largely due to some structural reorganization.

Two major loss factors were discontinued, the leases for two B737-300 aircraft and the loss making routes to Johannesburg and Lusaka scrapped, while all domestic services are now operated with the airline’s ATR aircraft. As the entire ATR fleet, comprised of both the -42 and then -72 models, is presently owned, plans are being finalized to sell and lease back some of these aircraft, all of which were acquired brand new from the French manufacturers.

The annual audit was carried out by Price Waterhouse Coopers, in short PWC, leaving no doubt on the accuracy of the financial results announced by the company’s Board of Directors.

Added information received about the immediate future of Precision Air also confirms the departure from the ambitious expansion course pursued by the former CEO, which largely ignored the realities on the ground.

Says the financial statement in reference to the current and next financial years:

“The Group looks forward to complete its turnaround strategy in time so as to capitalize on the gains made last year.

Sale & Lease back of some aircraft will be pursued in order to reduce borrowing, cost of financing capital and improve cash flow.

In the next year the group will focus tightly on improving profitability and liquidity by increasing revenues and maintaining costs at reasonable levels. The company will primarily focus on the following:

• better customer service at all customer touch points within our operations.

• overhaul the entire network and work on HUB and SPOKE strategy so as to maximize opportunities to get extra passengers on board our flights and thus make additional revenues on existing fleet.

• review the existing skill levels of our staffs and either upgrade it through coaching and training; or recruitment of the right people in the right places.

• tight and continuous focus on cost control across all functional areas.

• increase partnership portfolio and sign up more Special Prorate Agreements (SPA’s), code shares and joint ventures (JV’s) thus increase passenger revenue numbers.

• finalize and conclude on partnership arrangements in Ground handling and Maintenance so as to generate additional revenues alongside other ancillary revenue opportunities.”

Clearly one is looking at a major turnaround and change of fortunes for the better at Precision Air, and while no doubt there will be turbulences in the future, the main heading is now firmly set towards full recovery and a return to profitability.