The Tanzanian government has rejected a proposal for a public private partnership to rescue Air Tanzania Company Ltd (ATC), formerly Air Tanzania Corporation.

“There may be an urge to place Tanzania’s state-owned airline in partnership with private sector players because that is the trend for airlines in East Africa, but this is not workable for ATC because the airline is in bad shape,” said Adolf Mkenda, the Permanent Secretary in the Ministry of Industry, Trade and Investment.

He was responding to the chairman of the Confederation of Tanzania Industries, Jayesh Shah, who said it would be prudent to combine Precision Air, which is privately owned, and the debt-ridden state-owned ATC.

Mr Shah said it did not make business sense to have two airlines in the country desperate for external help, when that strength could be achieved by putting them together.

READ: Dar seeks funds in bid to revamp flag carrier Air Tanzania

But ATC has experienced failed mergers in the past. Tanzania’s national airline was established on  March 10, 1977 under the socialist Public Corporations Act of 1969 after the disintegration of East African Airways in 1977.

The airline went bust and started looking for partners, leading to failed partnerships with South African Airways and Uganda Airlines between 1993 and 1995.

Mr Mkenda acknowledged that joint ventures in the airline industry are the current trend in the region, with RwandAir partnering with Ethiopian Airlines and Kenya Airways with KLM.

An evaluation by Ernst & Young in 2009 found the airline to be in debt of Tsh26 billion ($12 million); the government said it will pump money into the airline to give it a fresh start.