Air Tanzania Co. Ltd (ATCL) needs a staggering Sh633 billion to remain afloat, a parliamentary committee said yesterday.

Mr Mohamed Missanga, the chairman of the parliamentary committee for Infrastructure, said financial difficulties were threatening the national airline's existence.

Briefing reporters in Dar es Salaam yesterday soon after holding talks with the management, Mr Missanga said the state air company needs about $507 million to stabilize since its severance from South African Airways in a failed joint venture.

The funds required for the recapitalisation of ATCL, whose only dependable source of income at the moment was state coffers, could be way beyond current capabilities, he said.

The government budget for the year 2008/09 did not spare money to fund the airline despite high expectations, the MP noted.

ATCL's need for Sh633 billion equals the combined budgets of the ministries of water along with minerals and energy, and dwarfs the Sh460 billion set aside to fund agriculture this financial year, he pointed out.

It was earlier expected that the government would fully assume the responsibility of raising the national airline after the collapse of the venture by late 2005, sealed the following year.

However in the absence of any big invesgtor, the MPs are warning that the company could become a big burden to the taxpayer.

Mr Missanga said ATCL has a burden of uncleared debts resulting from its operational partnership with the major regional airline.

"Financial difficulties will not end in the company unless it gets upwards of Sh600 billions," he said, crediting the company for doing well in the business despite its financial difficulties.

The ATCL management told the parliamentary committee that for a starting point, the company needs $75 million (more than Sh93 billion) and the rest in quarterly instalments until the situation stabilised.

Early this year, the ATCL management lamented that the government failed to release the monthly subsidy amounting to $500,000 to subsidise the company's operations.

Passengers complain of poor services ATCL offers despite higher ticket prices intended to cover its cash flow drawbacks, MPs noted.

Infrastructure Development minister Dr Shukuru Kawambwa had at some point advised ATCL to operate commercially while the government sought for an appropriate investor to take over the airline.

ATCL operates mostly domestic flights with a Boeing 737 on its internal flights and an Airbus for destinations to the rest of east and southern Africa.

Mr Missanga said the ATCL management told the committee that the government had picked a Chinese firm, Sonangol that has shown interest proposed arrangement.

The investor will help the airline stabilise its financial capacity to be competitive as it is a major company that is financially well off, he said, not elaborating on whether it will take majority shares and make the venture successful.

Sonangol is expected to start its business by hiring planes and later purchase an own fleet and expand the company's horizon, the MP added.