PriceWaterhouseCoopers (PWC) has cast doubt on Precision Air's ability to remain a going concern after the domestic Tanzanian operator and its associated subsidiaries (Precision Handling, its ground-handling unit, and Precise Systems which is Galileo's distributor in Tanzania) recorded a TZS91.67 billion (USD41.57 million) net loss for the financial year ending March 31, 2016, up from TZS83.9 billion recorded the year previous.

In a filing to the Dar es Salaam Stock Exchange, the auditor stated that the Precision Air Group's current liabilities exceed its current assets at March 31, 2016 by TZS232 billion (USD105.2 million) as compared to TZS139 billion in March last year. In addition, Precision Air has also defaulted on loan obligations to its lenders which would ordinarily render them repayable on demand. As such, if they were to be called in, the Group’s current liabilities would then exceed its current assets at March 31, 2016 by TZS362 billion (USD164 million). To further compound matters, Precision Air has also delayed remittance of statutory deductions and taxes to the relevant authorities.

"These conditions, together with the significant uncertainties embodied in management’s plan for ensuring the going concern status of the Group and Company, ..., indicate the existence of material uncertainties which cast significant doubt on the Group’s and Company’s ability to continue as a going concern," PWC said.

Unsurprisingly, management has disputed this assertion claiming the Group would remain viable for at least twelve months more.

Given this sentiment, Chief Executive Officer (CEO) Sauda Rajab has said the firm will press on with a turnaround plan which aims to stabilize operations by increasing frequencies to niche markets, improved market/fare sensitivity, greater cost controls, staff rationalization, and the revival of a joint-venture agreement with 41% shareholder, Kenya Airways (KQ, Nairobi Jomo Kenyatta).

Ever since a disastrous IPO in early 2012, Precision Air has struggled to cope with soaring costs, attributed mostly to a volatile Tanzanian Shilling, political uncertainty as well as an increasingly competitive domestic market.

The local market is expected to get even more difficult in the coming months given state-owned Air Tanzania (TC, Dar es Salaam) will shortly induct a pair of Dash 8-400s, cn 4492 and 4495, into its fleet in September. Given it is currently operating with a single Dash 8-300, the added capacity will allow the loss-making national airline to resume service to many of the destinations that both Precision Air and rival Fastjet (Dar es Salaam) currently serve.

At present, Precision Air (PW, Dar es Salaam) operates two ATR42-500s, two ATR42-600s, and nine ATR72-500s on scheduled passenger flights to Arusha, Bukoba, Kigoma, Kilimanjaro, Mtwara, Musoma, Mwanza, Pemba Wawi, Tabora, and Zanzibar locally and to Nairobi Jomo Kenyatta and Moroni International regionally.