Tanzania's Precision Air eyes single-aisle fleet renewal

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Tanzanian carrier Precision Air is looking at renewing its single aisle fleet by 2016 as part of the company’s five-year strategic plan approved by the company’s board of directors at the 20 November 2013 annual general meeting.

The private ATR 42/72 operator, which recently retired two Boeing 737-300s from service, says the narrowbody fleet acquisition will boost its cargo capacity.

Under the new five-year plan, the rationalisation of the airline’s networks and fleet will be done by "phasing out the carrier’s costly fleet" and introducing single-aisle jets three years from now, according to Precision Air's board chairman Michael Shirima.

“Such jets have belly capacity to also increase more revenue from cargo,” he comments.

In the March-September period, the Dar es Salaam-based carrier’s results were in line with the carrier’s strategic plan says Shirima and the company is now focused to report a profit after posting a 30.4 billion shillings ($18.8 million) loss during the year ending 31 March 2013.

The net loss in its last financial year marked a deterioration on a Tanzanian Shilling 1.2 billion profit in the previous year. Precision Air saw revenues grow 8.2% to Tanzanian shillings 176.4 billion but direct cost jumped 24% to Tanzanian shillings 176.4 billion due to fuel and increased equipment related costs, it says.

Shirima admits that some internal factors had a significant share on the 2012 results. He cites an inefficient network, costly fleet type, low productivity, lack of cost control and un-optimised ancillary revenue opportunities.

As a result, the Precision Air’s board has appointed Deloitte & Touche to review the carrier’s performance.

Shirima said revenue enhancement opportunities will focus on key revenue drivers: passenger revenue, yield improvement and fuel surcharge improvement, excess baggage, increased rates in cargo, ancillary revenues as well as third party aircraft maintenance.

“Other measures are aimed at business consolidation and re-thinking of business model given the external competitive environment. More importantly value enhancement will involve optimal deployment of existing assets to increase cash flow, improving operational efficiency, and reduce the cost of financing.”

Meanwhile Precision Air is looking to raise long-term capital to meet expected capital expenditure commitments, some of which were postponed during the last two years.

The carrier has two ATR 42-600s and a single ATR 72-600 to take delivery of over the next 12 months.