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Africa Business News of Tuesday, 30 March 2021

Source: thecitizen.co.tz

Tanzania: Aviation experts urge caution over ATCL’s Sh60 billion loss

That Air Tanzania Company Limited (ATCL) incurred a loss of Sh60 billion during the 2019/20 financial year could be news. But it is not news that should raise one’s eyebrows. A least, not until a complete statement on the airline’s operations is also issued, analysts said yesterday.

Much as they expect the government to comprehensively work on the advice of the Controller and Auditor General (CAG) on how to improve operations of the state-owned airline, experts in the aviation sector say it was not unusual for a company like ATCL to register such a loss.

Giving their views on the CAG’s audit report for 2019/20 which was presented to the President on Sunday, analysts said people could only start raising eyebrows if the reports said the loss was connected to misuse of public funds or if the report showed that the loss had actually been going up relentlessly.

The report triggered a hot debate on social media especially in the light of some political statements that had been issued during the past few years as the government tried to paid a picture that ATCL was actually making profits.

But analysts say the airline business was a very complex one and that across the globe, all major airlines were making losses.

An aviation expert with a vast experience of nearly 50 years Lawrence Paul said there was so much profit gained indirectly in airlines business and people don’t count when talking of profit.

These include jobs and services of suppliers to the air transport industry - such as aviation fuel suppliers, ground handlers, manufacturers of goods sold in airports and a wide variety of business services. There are very few airlines that are making profits in the world.

Mr Paul, the retired Tanzania Air Operators Association (Taoa) executive secretary said the reported loss had not shocked him because the aviation industry is in an era which is extremely difficult.

When you talk of March 2020 to date, airline operations are very difficult even to the most competitive airlines in the world due to Covid-19 pandemic.

“If big airlines like KLM, Emirates, Qatar, etc., were brought to their knees, what do you expect of ATCL?” he queried.

Mr Paul called for the government to step in by assisting ATCL financially through cutting down the leasing costs of aircraft for it to breathe.

Since 2015, the government has purchased new eight aircraft consisting of two Boeing 787-8 Dreamliners, two Airbus A220-300 models and four Bombardiers Q400 and leased them to ATCL.

An aviation expert with 46 years of experience, Mr John Njawa, said it does not need an aviation expert to tell that like other global airlines, ATCL has been severely hit by the Covid-19 which forced countries to close their airspaces.

Mr Njawa, former Tanzania Civil Aviation Authority (TCAA) safety regulation director also attributed the airline’s loss to underutilisation of their aircraft, saying airplanes meant for long-haul routes were being used for short-haul routes.

“ATCL needs to revisit its strategic business plan.

“The board and management might sit and look at all the things they did wrong and correct the mistakes,” he said.

Renowned aviation expert and trainer Juma Fimbo said aviation business is not meant for profit making, but rather for fueling economic activities.

“You cannot stop investing in transport, or the economy will be weakened,” cautioned Mr Fimbo.

He said if other things remained constant, it might take not less than five years for a new airline to break even.

The plan by the national carrier which was revived in 2015, to break even this year, has been interrupted by the Covid-19.

He said that without the Covid-19 coming down, things are bound to remain dire for the near future.

Mr Fimbo said if ATCL is to perform better, there should be no political interference in decision making, the board must consist of members with aviation background and frequent training to employees should be a priority.

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