Tanzania bails out its troubled carrier

The government has moved to investigate the downfall of Air Tanzania Company Ltd (ATCL) even as it dished out some Sh2.5 billion to the airline to resume operations.

Infrastructure Development minister Dr Shukuru Kawambwa announced on Friday that a task force would investigate ATCL’s management to establish the cause of its woes. The airline has been banned from flying.

At a press conference in his office in Dar es Salaam, the minister said the government decided to also release Sh2.5 billion to the cash-strapped airline as it awaited the report of the task force. He said the airline’s board had requested for a Sh3.3 billion bailout package.

Pending salaries

“We have already signed the cheque and disbursed that amount as a short-term move for the airline to resume its routine business and pay Sh320 million in employees’ pending salaries,” Dr Kawambwa said. There was no one from ATCL at the press conference.

Dr Kawambwa said the seven-man task force chaired by Ardhi University vice-chancellor Prof Idris Mshoro will table their findings and recommendations in 21 days. The team began its work six days ago.

The minister hinted at a possible change of guard at the airline, saying the investigations would influence the company’s fate, including laying out plans to create a fully-fledged commercial national carrier.

He described a report by the ATCL management as unsatisfactory.

“I will need to know some other things that I did not get from them. Their (ATCL Board) report raised more queries than answers,” he said.

“We cannot deny that there are weaknesses. It is not possible that the company goes this low without any one being responsible. We have to take disciplinary action and that only awaits the task force’s recommendations,” said Dr Kawambwa.

The minister, who has lately been in the spotlight over the poor performance of the newly privatised Tanzania Railways Company Limited. (TRL) and the Dar es Salaam Port, noted that the ministry was pushing on with other plans to revamp the carrier.

On Friday, the ATCL managing director David Mattaka told The Citizen he had not heard of the development. He however said the board and management would meet and see how best to allocate the released funds.

Even though Mr Mattaka was non-committal on when the airline would resume its operations, sources at the company said some Sh9 billion was required to offset “urgent debts” to normalise relations with its suppliers. These include fuel dealers and other service providers.

“The amount given is not enough, compared to our current budget to resume operations. But the moment we receive the Sh2.5 billion, we shall sit down and reshape our budget.”

The besieged management has come under fire for alleged complacency which led to the drastic move by the Tanzania Civil Aviation Authority (TCAA) and the International Air Travel Association (IATA) to ground its aircraft.

A fleet of its vehicles were last week attached due to unpaid debts but the government has offered to clear them.

Write off debt

The minister said the government would write off its Sh17.5 billion debt and settle others such as the $4.2 million owed by the airline to its former partner, South Africa Airlines and Sh9.1 billion owed to other suppliers.

“This is meant to make the airline’s balance sheet friendlier as we plan a number of interventions and strategies to bail out the carrier,” Dr Kawambwa said, adding that the government’s aim is to see ATCL return to profitability. He said Tanzania was in talks with a Chinese company to take over some of the airline’s operations.

The Tanzania Civil Aviation Authority, which suspended the national carrier’s flights last month, returned its airworthiness certificate allowing it to resume flying.

But that will highly depend on whether the airline will get money to finance its operations.