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.
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.