THE CHAIRMAN’S STATEMENT
The year 2020 was exceptional as a consequence of the economic and social impact associated with the global outbreak of COVID-19. The pandemic had a dramatic impact upon the aviation industry, along with numerous other businesses globally. Governments were forced to close airspace and introduce lockdowns, which, among other things, suppressed flying. In addition, airlines unilaterally put flying on hold due to limited demand. These measures were intended to stop the spread of the coronavirus, in order to protect health and ensure the safety of people. This resulted in a depressed aviation industry and, consequently, the financial performance presented in the report is significantly lower than the results achieved last year.
In response to the pandemic, Swissport Tanzania introduced various measures to protect the health and safety of its workforce, the airport and the travelling community. These measures were developed and implemented in line with the directives issued by the World Health Organization (WHO), under the guidance of the Company’s majority shareholder, Swissport International Ltd.Additionally, steps were taken to mitigate the financial impact attributed to the pandemic through a cost mitigation program spearheaded by Swissport International Ltd. The program was successful and assisted the Company in reducing operating costs, as well as preserving cash, to achieve the sustainability of its operations during these unprecedented times.
Despite curbing the outflow of cash from the business, the Company invested TShs 2.4 billion to complete the upgrade of the export cold-room, at Julius Nyerere International Airport (JNIA), and to purchase some essential ground support equipment (GSE) to enhance service delivery to airline customers. Plans are in place to continue investing in our warehouse facilities and ground support equipment based upon operational demand and health and safety requirements. We continued in our endeavors to deliver services which meet and exceed customer expectations, despite reduced business volumes and the health and safety threats attributed to the pandemic. We played a key role in assisting our customers to resume operations, whilst ensuring strict health and safety requirements, introduced by the airlines and Governments, were met.
We successfully retained all our operating customers and commenced the provision of ground handling services to Air Tanzania, the National Carrier, on 1st January 2020. Additionally, we secured contracts to provide ground handling services to FlightLink and As Salaam Air. I take this opportunity to thank our esteemed airline customers, for their unwavering patronage and support during the pandemic. I recognize that the survival of our businesses was under threat, however, we engaged in partnership to review operational and commercial terms to support each other to remain sustainable.
During the the course of the year, the Tanzania Airports Authority awarded a concession to a 3rd ground handling company to operate at JNIA. This decision further intensifies competition at JNIA, in a ground handling market that is barely large enough for two ground handling companies. This is likely to further negatively impact the return on investment, given current market conditions and the limited business growth opportunities. Disregarding the impact of COVID-19 in 2020, the financial performance of the company from years 2017 to 2019 has deteriorated significantly due to increased competition, the loss of a small number of customers and the price dumping strategy deployed in an aggressive bid to gain/retain market share. In as much as we believe in competition, and competing in other markets, a healthy competitive landscape is crucial for the prosperity of the ground handling business; this should be backed up by the size and growth of the market. This, unfortunately, is not the case in Tanzania, hence we would urge the authorities to reconsider the liberalization policy In pursuit of boosting the company’s revenue, we were able to secure a 10-year concession to develop and operate a business class lounge at Kilimanjaro International Airport (KIA). The lounge is still in the development phase, shall be opened in October 2021. This opportunity will enable Swissport to unveil its premium lounge brand “ASPIRE” in Tanzania, and compliment business recovery from the impact of the pandemic.
The future financial performance of the Company depends largely on the rate of business recovery from the pandemic, as well as the impact of the further liberalization of the ground handling business. As the world is rolling out COVID-19 vaccination programs, it is expected that flying will eventually normalize, and the business will recover to the pre-covid volumes. To respond to the competition, we shall continue investing in state-of-the-art ground service equipment (GSE) and warehouse facilities. We shall also continue investing in technology, process improvement and the development of our people. We shall always comply with industry standards, with the aim of delivering consistent quality services to airline customers in order to meet the agreed service requirements. Our objective is to be the partner of choice in aviation and to maintain our number one position in the ground handling business in Tanzania.
We thank our esteemed customers for their loyalty towards Swissport. We also appreciate the support we receive from the Ministry of Works & Transport, the Tanzania Civil Aviation Authority (TCAA), the Tanzania Airport Authority (TAA), the Kilimanjaro Airport Development Company (KADCO) and other stakeholders. Your support was, and continues to be, vital for the Company’s success. I would also like to thank the management team and employees for their hard work and dedication during these unprecedented times.
On behalf of my fellow board directors, I would like to convey my condolences to those who lost their loved ones from COVID-19, and to the people of the United Republic of Tanzania for the untimely passing of President Dr. John Pombe Joseph Magufuli. May their souls rest in peace and may perpetual light shine upon them.
I would also like to take this opportunity to congratulate Her Excellency Samia Suluhu Hassan for being sworn in to be the 6th President of the United Republic of Tanzania.
Jeroen de Clercq
The contents of the post above were obtained from third parties, which We, AfricanFinancials, believe to be reliable. However, We do not guarantee their accuracy and the above information may be in condensed form. The reader is encouraged to refer to the original source of the information, which, in most cases, is in PDF format and on the originating company's letterhead. While We endeavour to replicate the original content accurately, We cannot guarantee the absence of errors in the above article and We disclaim any liability regarding reliance on information provided in this article.