COMPETITION AND INVESTMENTS SEEN AS MAJOR CAUSE FOR 16 PERCENT DROP IN PROFITS
(Posted 23rd March 2017)
Swissport Tanzania, the country’s predominant aviation handling company and the only of its kind quoted at the Dar es Salaam stock exchange, has reported a fall in profits compared to the last financial year of 16 percent.
Observers were swift to point to the heavy investments the company made in equipment and a new cargo handling facility with significantly higher depreciation eating in to the profit margin of last years.
Pundits also ruled out increased competition as a cause for the drop in profits as in the words of one regular contributor from Dar ‘… none of those can match Swissport in terms of handling expertise or capacity and only exist because they get into the market with lower tariffs‘. Passenger handling revenues increased by some 7 percent though cargo handling revenues dropped over the past year due to a slackening economy.
Tanzania’s embattled Transport Minister Mbarawa in January publicly waded into Swissport but had to beat a hasty retreat when he failed to provide facts on his allegations made, probably well advised to avoid a legal case being brought against him at the time. He since then never raised his allegation again that Swissport was using underhand methods to keep competition at bay while providing poor services themselves, something most of the aviation sector laughed off as the loose talk of a hapless politician.
Net profits for the just ended financial year reduced to 15.23 billion Tanzania Shillings, down from 18.13 billion Tanzania Shillings the previous year but the company nevertheless paid a dividend to shareholders, among them the Tanzanian government of which Mbarawa is part, of 12.18 billion Tanzania Shillings.
Swissport handles most the major airlines flying into Dar es Salaam apart from Precision Air which has been granted self handling status.