ATCL has to bear with Treasury on plane ownership, large debts

It was on Friday when the management outlined a number of challenges it wants be resolved to allow it to effectively implement its newly-drafted business plan that focuses on expansion and profitability. Director General Ladislaus Matindi told President Samia Suluhu Hassan that one of the issues hindering the national

carrier’s smooth operations is the company’s ownership structure, with it finds onerously restrictive.

The country’s top leadership was at hand to receive a new Dash 8-400 aircraft at the Julius Nyerere International Airport (JNIA) whose arrival brings the ATCL fleet to nine aircraft, and the ATCL management was complaining that it does not own that fleet. The planes are owned by the government through the Government Flight Agency (TGFA) which unquestionably the ATCL management sees as a superlative agency, as the planes are intended for ATCL operations. As a matter of fact the government thinks differently, as at one time the late President John Magufuli said that the government was leasing the planes to ATCL as a priority rather than a right, intoning that the planes can be loaned elsewhere.

The ATCL management evidently wishes for a shift in attitudes where ATCL is consecrated as the rightful custodian of government aviation carriers planning, not where it is operating someone else’s planes but its own. In other words the public entity be taken as a sufficient corporate structure where the government can place planes worth more than one trillion shillings and expect a return of capital and a profit. It isn’t surprising that the government is exercising a measure of caution, which the company says it doesn’t allow it to “make certain business decisions such as increasing our fleet.” Another challenge is a pile of inherited debts making its earnings be directed to servicing the debts. That may look surprising.

The debts can be said to have been inherited by the current ATCL management and not by ATCL as such, as they aren’t inherited from the old East African Airways that collapsed towards the end of 1976. The company CEO went on to illustrate a similar snag, that ATCL used to own 20 per cent of shares of Sky Chef—a company providing on board catering services—but the shares were taken over by the Treasury Registrar. He asked that the shares be returned to ATCL to improve the firm’s financial position, which is definitely an arguable case, but to the fifth phase government that was a different source of revenues. In addition, outsourcing services means that one gets a service and pays for it, thus enhancing accountability.

Reacting to the remarks, President Samia acknowledged that she had indeed obtained the corporate entity’s current plan and expects to sit with top level advisors and see how to move forward. It is evident that there is a gap in perception, where the entity wishes to be free like other entities, though lacking in their ownership structures. To be operationally free, it would have to be largely privatised like the former govt-owned banks, NMB or CRDB; they no longer have to take business plans to the presidency, etc.