Tanzania: Precision Air’s Losses Soar, Currency Woes

PRECISION Air’s financial distress worsened in 2023, with the Tanzanian airline reporting a net loss of 57.4bn/-, a stark contrast to the previous year’s profit, according to filings.

The losses, driven by a dramatic rise in administrative expenses and crippling foreign exchange losses have further worsened the company’s already fragile financial position.

Despite a revenue increase to 134.7bn/-, up from 117.7bn/- the previous year, Precision Air’s bottom line was hit hard by a nearly sevenfold rise in administrative expenses, which soared to 16bn/-.

This surge, combined with a 35.6bn/- net exchange loss from US dollar-denominated debt and supplier balances, wiped out the gains from operational improvements.

As of December 31, 2023, Precision Air’s current liabilities exceeded assets by 537.5bn/-, with a shareholders’ deficit of 491.2bn/- and loans totaling 435.3bn/-.

Despite these challenges, CEO Patrick Mwanri remains optimistic, stating, “Precision Air is poised for a strong turnaround and we are confident our strategic initiatives will drive sustainable growth in the near future.”

He outlined key focus areas for recovery, including “cost optimisation, emphasising safety above all, fleet and route rationalisation, increasing our bar in customer service and maximising aircraft utilisation to enhance operational efficiency.”

Mr Mwanri highlighted investments in “smart technologies to boost productivity” and emphasised the growth potential of Tanzania’s expanding aviation sector as key to the airline’s recovery.

He noted that, coupled with internal strategic initiatives, Precision Air aims to return to a strong financial position.

The CEO also pointed to positive trends in the financial report from 2018 to 2023 as evidence of resilience.

Passenger numbers grew from 470,624 in 2018 to 481,981 in 2023, recovering from a pandemic dip of 245,875 in 2020. The cabin factor improved from 53 per cent in 2018 to 65 per cent in 2023, reflecting better seat occupancy