in Dar es Salaam
THE regional aviation industry is becoming more competitive, with the announcement that heavy hitter, South African Airways, will buy Air Tanzania Corporation for $20m.
This week the Tanzanian government picked SAA as winning bidder for the purchase of ATC.
According to an official statement issued in Dar es Salaam on Wednesday, SAA has offered to pay $10m (about sh18b) for the 49% shares in the new Air Tanzania Corporation Limited (ATCL). SAA will also inject the same amount into a capital and training at ATCL.
The latter will finance a business plan proposed by SAA to turn round the airline.
SAA, as a strategic partner, intends to create Dar es Salaam as its East African hub, as it is strategising to form a 'Golden Triangle' between southern, eastern and western Afica, the statement said. It is expected to take to Dar es Salaam, technical, commercial and managerial expertise into ATCL operations. It will provide extensive training and skills transfer to ATCL staff, including retraining of pilots and air crew.
The significance of this deal, is that Entebbe International Airport lost out in becoming SAAâ€™s regional hub, after negotiations with Government for buying Uganda Airlines Corporation, collapsed two years ago.
Originally, eight airline companies had expresed interest in becoming strategic partners in the ATC privatisation. They included SAA, Kenya Airways, Comair and Nationwide, both of South Africa, Gulf Air Falcon of United Arab Emirates, Aero Asia International of Pakistan, Air Consult International of Ireland and Precision Air of Tanzania.
Of these eight, only four - SAA, Kenya Airways, Comair and Nationalwide - carried out due diligence. However, on the bid deadline, which was September 19 this year, only SAA submitted a bid with other withdrawing their previous interest in the deal.
SAA intends to replace the ATC fleet with Boeing 737-800s, 737-200s and wide bodied 767-300s. The route structures will expand to cover regional routes including Enttebe (Uganda), Kinshasa (DRC), Lusaka (Zambia) and Harare (Zimbabwe).
Routes to the Middle East and West Africa would also be introduced. There are plans to also extend ATCL services to Bombay and London.
SAA to buy Tz airline