Skip to main content

Precision Air predicts brighter future ahead with five - year strategic plan

PRECISION Air (PW) predicts a rosier future in the years ahead with full implementation of the company’s five-year strategic plan as approved by the company’s board, the Precision Air's Board Chairman Michael Shirima said.

One of Precision Air's ATR72

Speaking during the company’s Annual General Meeting in Dar es Salaam yesterday, Shirima said the company’s half year results (unaudited) for the period April to Sept indicates a very positive outlook with the actual results in line with the strategic plan.

Shirima said the company is now focused to remain a profit making company even after posting a Tshs 30 billion loss during the year ending March 31st 2013.

He said during that period,the company’s total assets increased more than ten-fold from Tshs 23 billion in 2006 to Tshs 276 billion as on March 31st 2013.

“The growth of assets was at par with the growth of the company’s capacity to airlift more passengers.From moving 340,000 passengers in 2006 to 896,000 passengers in 2013, is not a small achievement. “Unfortunately, growth in the number of passengers did not translate into profitability growth for reasons some of which are pointed out below. 

The reported loss in 2013 brings down the average net profit margin for the past 8 years to just one (1) per cent,” he added. Mr Shirima said businesses with such narrow profit margins are highly sensitive to external shocks affecting either revenue stream or cost elements.

“This is further complicated by the currency mismatch Precision Air’s cash flow: revenues are mainly denominated in local currency while larger percentage of costs (fuel and maintenance) is in foreign currency.
For example, a large part of Precision Air’s income is in shillings, while most of the expenditure is in foreign currency (aircraft purchase, spare oil and large repairs), therefore that possibility of losses arising reductions in the value of the Tanzanian shilling compared to the American dollar,” he said.

He said the company’s management foresaw these challenges and oncoming storms and acted proactively to steer the company clear of turbulences adding that one of the steps deployed was seeking long-term capital inviting new shareholders through Initial Public Offer (IPO) and subsequently listing ordinary shares on the Dar es Salaam Stock Exchange (DSE) in 2011.

“We did not succeed in raising the amount we needed and this shortage aroused many problems. The lack of the capital expected put the Airline in a compromising position because the aircraft had already been ordered in advance since aircraft orders require earlier placements and fifteen per cent deposit of the price of these aircraft was paid.

“Cancellation of the aircraft orders would have attracted heavy penalties and also slowed the company’s growth plans. As a result, the company experienced pressure on its cash flow and eroded the company profitability but despite the above, the value of shares in the DSE market, although rarely traded, have held steady at a price of 475/- per share.

Mr Shirima said external factors played part in this dismal performance, but admitted that there were some internal manageable factors that had a significant share on the reported results. “After thorough performance review for the past few years, the Board has noted key possible source of trouble.

These are: inefficient network, costly fleet type, low productivity, lack of cost control and un-optimized ancillary revenue opportunities. The lesson has been learned. The Board made significant change in management and is optimistic that these problems presents an opportunity to drive back the company to profitability for the days ahead.

He said his company is currently pursuing other means to raise long-term capital in order to meet expected huge capital commitments, some of which were postponed during the last two years.

Mr Shirima noted that rationalization of the airline’s networks and fleet will be done by reviewing current situation and utilization of sub-optimal capacity which was averaging below 65 per cent for the past eight years.

“This will include phasing out costly fleet and introducing single isle jets three years from now. Such jets have belly capacity to also increase more revenue from cargo.”

He said Revenue enhancement opportunities will focus on key revenue drivers: passenger revenue – yield improvement and fuel surcharge improvement, excess baggage – tighter control to improve collection, cargo – increase rates and ancillary revenues – third party aircraft maintenance and various advertisements.

“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 cost of financing. Cost control measures will not compromise fleet safety.

He said successful implementation of the above measures, coupled with securing long-term capital will put the company back into profitability path and reward shareholders for the patience endured during the turbulence period.

Comments

Most Viewed Posts

Job Opportunities at Air Tanzania (ATCL)

VACANCIES ANNOUNCEMENT Air Tanzania Company Limited (ATCL) is in the process of revamping its operations and has introduced new equipment to its fleet. The Company is therefore inviting applications from qualified personnel to fill various positions.
1.      POSITIONS: 
1.1. Dash 8 – Q400 Mechanical and Avionics Certifying Engineers (6 POSTS) 
   a)    Qualifications·         ·Must possess a valid Aircraft Maintenance Engineers License (ICAO TYPE II).  ·        ·Must possess a valid Dash 8 – Q400 Approval/License.·Must have successfully completed Dash 8 – Q400 type course from an Approved Training Organisation.       ·Must have Aircraft Maintenance working experience, as a certifying engineer, of not less than 5 years; 2 of which being on Dash 8 – Q400. Experience must include release to service certification after “A” Check and above.       ·Computer literacy·        ·Fluency in English·        ·Possession of Dash 8-Q300 Approval/License will be an added advantage.

   b)    Duties and res…

Job Opportunities at Air Tanzania: Pilots-in-Command, Co-Pilots,Aircraft Maintenance Engineers and Cabin Crews.

Air Tanzania Company Limited (ATCL) is in the process of revamping its operations and has introduced new equipment to its fleet. The Company is therefore inviting application from qualified personnel to fill various positions.
1. POSITIONS: 1.1 Pilot-in-Command – Dash 8 (11 Posts) a) Qualifications: Must possess Airline Transport Pilot License (ATPL) and with performance “A”.Must additionally achieve the following:- ·Minimum of 4000 hours flying experience of which 2000 hours must be command on multi-engine aircraft; Above 17 ton. ·Group 1 endorsement on DASH 8 or Equivalent with a minimum of 500 hours command on type; ·Pass an oral interview and flying acceptance check conducted by the Company; ·Must pass a Base and Route check with an Instrument Rating within 10 and 70 hours respectively; ·Track record of good performance as a Commander and no accident record.
b) Duties and responsibilities: ·To command the aircraft with due regard for safety and comfort of passengers at all times. ·To maintain…

Job Vacancy At Precision Air - Cabin Crews (10-Posts)

JOB VACANCY Precision Air Services Plc is a fast growing private Tanzanian airline which operates in Partnership with Kenya Airways, with its strategies to expand wings beyond East Africa and Africa.
In order to keep our services at a higher level and meet our customers’ maximum satisfaction We wish to invite applications from suitably qualified candidates to fill in this challenging position.
POSITION:          CABIN CREWS(10-POSTS) REPORTS TO:     CHIEF CABIN CREW DUTY STATION: DAR ES SALAAM ROLE PURPOSE OF THE STATEMENT
You will be reporting to Chief Cabin Crew/Assistants Chief Cabin Crew - P