South African Airways has finally concluded a deal with the Tanzanian government to take over 49 per cent of the shares the former Air Tanzania Corporation (ATC) following an initial deposit of $20 million.
It will henceforth be known as Air Tanzania Company Ltd (ATCL).
The deal was concluded on December 2 in Dar es Salaam, bringing to an end claims that SAA was reluctant to pay the government $20 million because it considered ATC to be a "worthless" investment.
It also concluded the winding up of ATC, a public enterprise that was 100 per cent owned by the government since its establishment in 1977 after the collapse of East African Airways. The deal was signed by chairman of the Parastatal Sector Reform Commission John Rubambe and SAA chief executive officer Andre Viljoen.
Mr Viljoen told The EastAfrican that SAA would from next month increase ATC's aircraft to four by adding a Boeing 737-800, 737-200 and 767-300. At present, ATC has only one aircraft.
Mr Viljoen said SAA would increase flights to Entebbe, Kinshasa, Lusaka and Harare, besides reviving routes to the Middle East, West Africa, London, Australia and Bombay.
We intend to spread our wings in Africa and to other regions in the world in line with our strategy of networking Africa, he said.
The government will retain 51 per cent shares in ATCL. Of the $20 million, $10 million will be used to purchase the 49 per cent shareholding and the other $10 million will go towards the capital and training account earmarked for the capitalisation of ATCL.
The SAA boss said the company was also replacing its fleet of 65 aircraft with new aircraft to be delivered by Boeing manufacturing company in January. SAA will be charged with improving technical, commercial and managerial expertise in ATCL operations through the provision of training to ATCL pilots, air crew and paying 250 employees' salaries.
SAA intends to make Dar its business hub on its way to forming a "Golden Triangle"' between Southern, East and West Africa.
Minister for Transport and Communications Prof Mwandosya told The EastAfrican that the government was also considering selling a further 10 per cent of its shares in ATCL to a local investor six months after the commencement of the partnership between SAA and ATCL.
Prof Mwandosya said that all ATC assets and liabilities would be transferred to Air Tanzania Holding Corporations, which is to be owned 100 per cent by the government. At its inception in 1977, ATC owned 11 passenger aircraft.
In 1992, the government took over long term debts of ATC amounting to Tsh12 billion ($12 million) and restructured the airline, including laying off some of workers.