Auditors of Air Tanzania are recommending that the carrier collaborates with the government on a study to determine the most suitable aircraft operation model, after revealing continuing heavy losses at the company.
This should include an assessment as to whether it should continue to use Airbus A220s, after its fleet underwent a prolonged period of grounding over engine issues.
Air Tanzania’s net loss for 2023-24 reached TSh91.8 billion ($34 million), more than 60% deeper than the previous year.
In a presentation to the government during March, the country’s national audit office stated that the carrier had recorded “persistent losses” for the past six years, despite government subsidies including TSh70 billion for employee salaries and TSh57 billion for development projects.
Accumulated losses have exceeded TSh530 billion, says the audit office. “The worsening financial position was primarily driven by high lease and maintenance costs for newly acquired aircraft, further straining resources,” it says.
Air Tanzania has suffered disruption and revenue losses from the grounding of its Airbus A220-300 twinjets.
Four A220s were grounded for periods between 279 and 721 days, the office states, up to the end of June last year. It attributes this to durability issues affecting Pratt & Whitney PW1500G engines, and lack of spares availability.
The carrier incurred fixed costs of nearly TSh9.2 billion on the four aircraft during the grounding, and while the government offered around TSh5.5 billion as a lease incentive, this did not cover the full financial impact.
According to the audit office, the situation arose from “inadequate feasibility studies before acquiring the aircraft” and “lack of understanding of purchase contract terms” – resulting in “missed warranty claims” for the damaged engines.
“The company has incurred unnecessary financial burdens that could have been covered,” it adds.
Air Tanzania’s fleet problems have also included delays to freighter operations – arising from permit and slot hold-ups – as well as uneconomical maintenance on a De Havilland Dash 8-300 which “remains non-operational”, despite expenditure of TSh20.6 billion.
“The aircraft had been grounded for over seven years, including nearly four years of the unsuccessful maintenance,” says the audit office.
It blames “challenges” in obtaining spares for the model, and adds that the airline’s management “failed to assess” the economic feasibility of refurbishment before incurring the costs. The aircraft was still not functional at the end of June 2024.
