SWISSPORT Tanzania has reported a 70 percent net profit drop after losing almost two-third of business from Fastjet, which went under.
The Dar es Salaam Stock Exchange listed firm said yesterday at its virtual AGM in Dar es Salaam that the profit slowed down to 2.31bn/-last December from 7.45bn/-previous year and shareholders agreed no dividend payout for 2019.
Swissport’s Chief Executive Officer (CEO), Mr Mrisho Yassin said that a substantial chunk of the revenue was lost due to the reduction of number of flights handled—mainly from Fastjet.
“The company has continued to record a declining financial performance as a consequence of the competition in the ground handling business in the country, especially when our largest customer, Fastjet stopped its operations towards the end of 2018,” Mr Yassin said.
The pullout budget airline had a massive negative impact to the number of flights handled in last year and experienced a 5,630 flight drop. In 2019 Swissport handled 8,412 flights from 14,051 flights. Also the loss of Etihad Airways due to cessation of business in the country, as well as Rwanda Air and KLM passenger handling business went to competitors.
Total operating revenue last year shrunk by 26 per cent decrease to 35.4bn/-compared to 48.2bn/-in 2018, this contributed to the drop of ground handling revenue.
On top of that he said airlines fare discount offered last year had a negative impact on their financial performance dropping by negative six per cent as compared to 2018.
Explaining that, due to the mentioned factors the company’s revenue in 2019 has decreased by 26 percent as compared to 2018, while its operating costs have decreased by 15 percent. Despite losing airline customers, the firm successfully retained a significant market share of both ground and cargo handling business, he said.
Mr Yassin said in an AGM attended by over 100 shareholders that it was then agreed for the first time in the company’s history that the firm will not give dividend for the financial year. In the meeting it was unanimously agreed that the firm will not provide dividend this year, and instead use the entire amount to the firm to pay business debts.
He further gave the projection for this year that the revenue will increase especially due to winning Uganda Airlines and Air Tanzania contracts.
However, he said that Covid-19 has disturbed the company’s expectations financially, causing the revenue to drop compared to 2019, but the company’s board will take all steps to make sure it has money to support itself.