Kenya Airways is set to increase its stake in Tanzanian carrier Precision Air to 49%, pending regulatory approval of a proposed $10 million cash injection.
Precision Air has struggled after a failed IPO on the Dar es Salaam stock exchange in early 2012, combined with high costs attributed to fuel prices and a volatile Tanzanian Shilling.
Kenya Airways has stated that the conditions for the cash injection include Precision Air either selling outright or sell-and-leasing back five of its aircraft (two ATR42-500s, two ATR42-600s, and five ATR72-500s); laying-off more than a fifth of its staff and committing to further financial restructuring.
As part of the ongoing restructuring, Precision Air has already returned its two B737-300s to their lessors, while terminating all but two of its regional routes in favour of a domestic-oriented network.
As a result, Precision Air recently posted a full-year operating profit of TZS3.61bn ($2.21 million) for the last fiscal year.