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

Dar es Salaam. November 20, 2013. 

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.

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.

“Precision Air PLC has weathered the storm of the past few years and remained intact amid challenging environment of soaring jet fuel prices and slowdown of the global economy.

“Amid this challenging environment, Precision Air recorded a loss of Tshs 30 billion for the year ending March 31^st 2013. Prior to this loss, the company had posted an average of a net profit margin of 4 per cent for the preceding seven years from 2006,” he said.

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 31^st 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. Indeed moving a total of close to 5 million passengers over this period, all arriving at their respective destinations in “one piece” is an enviable feat.

 “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.

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 roused many problems. The lack of the capital expected put the Airline in a compromising position because the aircrafts had already been ordered in advance since aircraft orders require earlier placements and fifteen percent (15%) deposit of the price of these aircrafts 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 Tshs 475 per share.

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.

“As a result, the Board has appointed Deloitte & Touche to dig further into the performance of the company, and we awaiting their report which will determine way forward. Furthermore, 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.

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.

Precision Air kujiimarisha na mpango mkakati wa miaka mitano

Na mwandishi wetu

SHIRIKA la Ndege la Precision Air limejipanga kujiimarisha zaidi katika miaka michache ijayo baada ya utekelezaji wa mpango mkakati  uliopitishwa na bodi ya shirika hilo wa miaka mitano, Mwenyekiti wa Bodi ya Wakurugenzi ya Precision Air Michael Shirima amesema.

Akizungumza wakati wa Mkutano Mkuu wa Mwaka jijini Dar es Salaam jana, Shirima alisema matokeo ya shirika ya nusu mwaka kwa kipindi cha Aprili mpaka Septemba kimeonyesha matarajio chanya ya kuwa na matokeo mazuri yatokanayo na mkakati huo.

Shirima alisema shirika sasa limelenga kubaki kuwa shirika linalotengeneza faida zaidi licha ya kupata hasara ya shilingi bilioni 30 katika kipindi cha mwaka unaoishia Machi 31, 2013.

“Shirika la Precision Air PLC lilipata changamoto mbali mbali katika miaka michache iliyopita na kubaki kuwa imara licha ya kukumbana na changamoto za bei ya mafuta na kuanguka kwa uchumi duniani.

“Kutokana na changamoto hizi, Precision Air ilipata hasara ya shilingi bilioni 30 kwa kipindi cha mwaka kinachoishia Machi 31, 2013. Kabla ya hasara hii, shiriki liliweza kupata kadirio la faida ya asilimia 4 katika kipindi cha miaka saba kuanzia mwaka 2006,” alisema Shirima.

Alisema wakati wa kipindi hicho, mali za shirika ziliongezeka zaidi ya mara kumi kutoka shilingi bilioni 23 mwaka 2006 mpaka bilioni 276 ilipofika Machi 31, 2013.

“Ongezeko la mali za shirika lilienda pamoja na kukua kwa uwezo wa shirika kubeba abiria wengi zaidi. Kutoka kusafirisha abiria 340,000 kwa mwaka 2006 mpaka abiria 896,000 kwa mwaka 2013 siyo mafanikio madogo. Kufikia jumla ya abiria milioni 5 kwa kipindi hiki, wote wakifika katika maeneo yao “kwa amani” ni suala la kujivunia.

“Kwa bahati mbaya, kuongezeka kwa idadi ya abiria haukuliwezesha shirika kuongeza faida kwa sababu ambazo zimeelezwa hapa chini. Hasara iliyopatikana mwaka 2013 imesababisha kushuka kwa faida katika miaka nane iliyopita mpaka asilimia moja,” aliongeza.

Shirima alisema kuwa biashara zinazokuwa na faida ndogo kiasi hicho utokana na sababu zitokazo nje zinazoathiri aidha mapato ya shirika au gharama za uendeshaji.

“Hali hii imekuwa mbaya zaidi kama kuna kutokuwiana kwa mapato na matumizi (currency mis-match). Kwa mfano sehemu kubwa ya mapato ya Precision Air ni katika shilingi wakati sehemu kubwa ya matumizi ni fedha za kigeni (ununuzi wa ndege, vipuri mafuta na mategengenezo makubwa), hivyo kuwa na uwezekano wa hasara inayotokana kupungua kwa thamani ya Shilingi ya Tanzania ikilinganishwa na dola ya kimerikani,” alisema.

Alisema kuwa uongozi wa shirika ulitambua vikwazo na changamoto hizo mapema na kuchukua hatua za awali kukabiliana nazo ili kuinusuru kampuni na kuongeza kuwa njia mojawapo kubwa ya jitihada hizo ni kutafuta mtaji wa muda mrefu kupitia uuzaji wa Hisa kwa Umma kwa Mara ya Kwanza na hatimaye kuzioredhesha hisa kwenye Soko la Hisa la Dar es Salaam (DSE) mwaka 2011.

“Hatukuweza kufanikiwa katika kuongeza kiasi tulichokihitaji na upungufu huu ukaleta matatizo mengi. Kutopatikana kwa mtaji uliotarajiwa kuliliweka shirika mahali pabaya kwani ndege zilikwisha agizwa na kulipiwa fedha za awali na kiasi cha asilimia 15 cha bei za ndege hizo ililipwa”

“Haingekuwa busara kujitoa katika kununua ndege kwani fedha za amana zingepotea na uimarishaji wa shirika ungeadhiriaka kwa kukosa ukuaji. Na matokeo yake ni shirika lilipata shinikizo la mtiririko wa fedha (cash flow) na upatikanaji wa faida. Pamoja na hayo thamani ya hisa katika soko (DSE) haikuporomoka kwa kuwa zimesimamia kwenye Tshs 475 kwa kila hisa,” alisema Shirima.

Shirima alisema kuwa ni kweli sababu zilizo nje ya kampuni zimechangia kuwa na matokeo hafifu ya biashara. Ila ni hekima kukubali kuwa kulikuwa pia na sababu za ndani ya kampuni ambazo zimechangia kwa kiasi fulani kutufikisha hapa.

“Baada ya uchambuzi wa kina wa utendaji wa kampuni, Bodi imebaini maeneo yafuatayo kuwa inawezekana ndicho kiini cha kudorora kwa ufanisi. Maeneo hayo ni mtandao wa safari usio na ufanisi, ndege zenye gharama kubwa ya uendeshaji, tija hafifu, kukosekana udhibiti wa matumizi na udhaifu wa kufuatilia vyanzo mbadala vya mapato.

“Tumepata fundisho na hivyo Bodi imefanya mabadiliko makubwa ya kiuongozi ikizingatiwa kuwa haya matatizo yameonesha fursa ya kurudisha biashara katika mwelekeo wa faida siku zijazo,” aliongeza.

Aidha, alisisitiza kuwa hivi sasa shirika hilo liko kwenye mazungumzo ya kupata mtaji wa muda mrefu ili kukidhi utekelezaji wa majukumu yaliyoahirishwa miaka miwili iliyopita.

Shirima alibainisha kuwa uwiano wa  mitandao ya safari zilizopo utafanyika kwa kuangalia hali iliyopo sasa yakibiashara na utumiaji wa ‘sub-optimal capacity’ ambao ulipungua kwa asilimia 65 katika kipindi miaka nane iliyopita.

“Hii itajumuisha uondoaji wa ndege zenye gharama kubwa na kuleta ndege kubwa aina ya Jet miaka mitatu kuanzia sasa. Ndege hizi zinauwezo mkubwa wa kubeba abiria na kuongeza mapato kutokana na mizigo,” alisema Shirima.

Alisema fursa za kuongeza mapato zitajikita kwenye vyanzo vikuu, ambavyo ni: nauli – kuboresha tija na tozo ya ziada kwa ongezeko la bei ya mafuta; mizigo ya ziada – udhibiti ili kuongeza makusanyo; mizigo ya jumla – kuongeza viwango vya tozo; na mapato mbadala – matengenezo ya ndege za kampuni nyingine na matangazo.

Njia nyingine zitakazotumika ni kupitia upya muundo wa biashara kwa ujumla na kufikiria upya utayari wake katika mazingira ambayo ushindani ni thabiti. Muhimu zaidi ni kwamba kuongeza thamani ya biashara kwa wamiliki wa kampuni kutahusisha matumizi mahususi ya rasilimali zilizopo katika kuongeza faida, kuongeza ufanisi wa kiutendaji, na kupunguza gharama ya mtaji. Hata hivyo, udhibiti wa gharama kamwe usifikie hatua ya kudhoofisha usalama wa vyombo vya usafiri.

Alisema mafanikio ya utekelezaji wa yaliyoainishwa hapo juu, pamoja na upatikanaji wa mtaji utaiwezesha kampuni kupata faida na hivyo kuwafaidisha wanahisa waliovumilia katika kipindi hiki cha dhoruba na mitetemo ya kibiashara.