Tanzania’s Precision Air Faces Legal Action Over $26 Million ATR 42 Debt

Summary

• Export Development Canada is seeking $26 million in unpaid rentals and termination fees from Precision Air.
• Precision Air failed to make multiple payments to the export credit agency and ignored payment requests.
• Precision Air is one of the largest operators of ATR aircraft in Africa and currently has a fleet of 9 turboprops.

Tanzania-based regional carrier Precision Air is in a legal battle with Canadian government agency Export Development Canada (EDC) for an aircraft financing agreement involving two ATR 42-600s acquired over ten years ago. The export credit agency is claiming about $26 million in unpaid rentals and termination fees.

Precision Air reportedly defaulted on payments

As reported by GTR, Export Development Canada filed a claim against Precision Air in the UK High Court. The financial agreement between the two parties dates back to 2012, when EDC provided financial assistance to Precision Air to acquire two ATR 42-600s as part of its fleet expansion plan. The agreement involved Irish aircraft leasing firm Antelope Leasing Finance, which acted as the debtor and held the turboprops as collateral on EDC’s behalf.

The Dar es Salaam-based carrier was required to make rental payments and eventually take ownership of the aircraft once the loans were fully settled. However, as revealed in case filings from December 2023, Precision Air failed to make multiple payments to the export credit agency. Furthermore, GTR reports that the airline has ignored multiple payment requests since 2021.

Export Development Canada is seeking $13 million for each ATR 42-600. For the first aircraft, it claims unpaid rental sums of up to $11.7 million and a termination fee of $1.3 million. Similarly, for the other aircraft, EDC claims nearly $11.3 million in unpaid rentals and a termination sum of $1.6 million.

Simple Flying reached out to Precision Air for comment and will update this article with any response.

Precision Air’s deal for ATR 42 aircraft

Precision Air is one of the largest operators of ATR aircraft in Africa. It has various models in its fleet, deploying them on over ten domestic and regional routes from its hub at Dar es Salaam Julius Nyerere International Airport (DAR). It also flies the turboprops to over four destinations from Zanzibar Airport (ZNZ).

In December 2011, the Tanzanian airline signed a contract with ATR to purchase four ATR 42-600s and one 72-600 aircraft. The deal was worth about $98 million and would make Precision Air the largest ATR operator on the continent, with 14 turboprops in its fleet. At the time, the airline flew from Tanzania to Kenya, Uganda, Comoros, Zambia, and Congo.

The first ATR 42-600, registration 5H-PWH, was delivered in November 2012 and was the first of the -600 series to enter commercial service worldwide. Financial statements from September 2022 suggest that the two aircraft in question have been out of service since 2017 and were being refurbished to be returned to the lessor.

According to ATDB.aero, 5H-PWH exited Precision Air’s fleet in November 2015 and is stored at DAR. The second 42-600, registration 5H-PWI, was delivered in December 2012 and was only operated until December 2014. The other three airframes ordered in 2011 were never delivered.

A fleet of 9 turboprops

Precision Air has been around for over three decades, having commenced operations in 1993. It started as a private charter company, flying tourists to game reserves and island resorts. However, the growth in demand for air travel in Tanzania prompted the airline to start scheduled passenger flights with Cessna 207s, 402s, and 404s. It introduced ATR aircraft into its fleet in the mid-90s.

Precision Air’s biggest turnaround came in 2003 when Kenya Airways acquired a 49% stake in the airline. Today, it has a fleet of eight turboprops, according to ch-aviation’s fleet module. This comprises five ATR72-500s and one 42-500 listed as active. The rest of the fleet includes two inactive ATR42-600s and one wet-leased 72-500. Unfortunately, the carrier lost one ATR 42 in a devastating crash in 2022.

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