Tanzania sells 49p.c. of airline to Chinese firm

Thursday February 05 2009

Tanzania plans to sell a 49 percent stake in its state-run Air Tanzania to a Chinese firm that will help it buy nine planes, a senior government official said on Wednesday.

The Tanzania Civil Aviation Authority (TCAA) suspended the carrier's operating license in December, but the firm has since resumed operations.

"The government has ... found a private investor ready to enter an agreement with Air Tanzania by buying a 49 percent shareholding," said Hezekiah Chibulunje, deputy minister for Infrastructure Development.

He told parliament that the investor, China Sonangol International, was willing to help with the purchase of more aircraft.

"It has agreed to help the government to look for funds to implement Air Tanzania's investment strategy that involves buying nine planes ... for domestic and international flights."

Since establishment in 1977, the airline has made operating profit in one or two years only and was unable to meet its direct operating costs for the whole of 2008, according to documents from the government's audit office.


It is the second time Tanzania has sought a partner for the loss-making carrier. In 2006, South African Airways gave up a 49 percent stake in the airline for $20 million after only five years of being a shareholder.

Established in 2004, Sonangol is largely involved in exploration for oil, gas and minerals, crude oil trading and large-scale national reconstruction projects.

In Africa, it has a stake in Angola's Sonair airline.

The government audit office said earlier this year that Sonangol signed a nonbinding memorandum of understanding allowing it to give the Tanzanian carrier $21 million for planes.

The government's announcement comes ahead of a visit by Chinese President Hu Jintao to Tanzania later this month.