The merger between the South African Airways and Air Tanzania Corporation that resulted in the formation of ‘Air Tanzania Company Ltd’ has collapsed. Minister for Infrastructure Development, Basil Mramba, told the National Assembly that the two parties were negotiating on how to end the deal without hurting one another. In 2002 South African Airways (SAA) paid $20 million for a 49% stake in ATC. It was expected that half of the $20 million, would go into the 49% shareholding, and the rest would be directed toward the capital and training account earmarked for capitalisation. Before privatisation, ATC owned one passenger aircraft, a Boeing 737-200. Some have accused SAA of failing to meet part of the management agreement. Tanzania Civil Aviation Authority Director-General Margaret Munyagi was quoted in the East African as saying that Air Tanzania was in a “worse state than before it was taken over by SAA”. SAA in turn accused Tanzania’s government of not “being serious” in failing to release about $30m needed to implement Air Tanzania’s business strategy to reverse continued losses.

In April the government announced it had decided to dispose of ATCL, following years of losses. It had become insolvent after accumulating losses amounting to TShs 24.7bn/- in the four years since it had merged with South Africa Airways. However, the minister made it clear that there was a need to start a national airline that would meet the expectations of its clients and the country. A number of potential investors including Precision Air, Ethiopian Airlines and Gulf Air had expressed interest – Guardian.