BOEING AND AIR TANZANIA: WINDOW OF OPPORTUNITY

C O N F I D E N T I A L DAR ES SALAAM 001484

SIPDIS

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E.O. 12958: DECL: 11/07/2017
TAGS: ECON BEXP ETRD PREL EINV BTIO TZ
SUBJECT: BOEING AND AIR TANZANIA: WINDOW OF OPPORTUNITY
CLOSING FAST

REF: A. DAR ES SALAAM 1410

B. DAR ES SALAAM 1249

C. DAR ES SALAAM 1074

Classified By: Deputy Chief of Mission, D. Purnell Delly for
reasons 1.4 (b,d).

Summary
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1. (C) Since our last update, there still have been no
substantive negotiations between Boeing and Air Tanzania
(ATC),and Boeing has been informed by one ATC Board member
that the airline will purchase Airbus aircraft. In the words
of Boeing's representative for East Africa, this has "not
been a competitive process." End summary.


2. (C) Post has advocated aggressively on behalf of Boeing in
its competition with Airbus to replace Air Tanzania's aging
fleet (reftels). In the course of this advocacy, ATC and
Government of Tanzania (GOT) officials have repeatedly
assured the Ambassador, DCM, and other USG and Boeing
representatives that ATC has not made a decision regarding
the purchase of new aircraft, and that the company will
engage in a transparent acquisition process. (Note: ATC is
wholly owned by the GOT.)


3. (C) However, Robert Faye, Boeing's regional representative
for East Africa, informed Post on November 6 that a member of
the ATC Board had contacted him to tell him that ATC was
planning to lease and purchase Airbus aircraft because Airbus
could provide aircraft at an earlier date than Boeing could.
Boeing believes this is a red herring and assures us that the
dates for availability of Boeing and Airbus aircraft are the
same. ATC CEO David Mattaka is not returning Faye's calls.


4. (C) Since Post began advocacy efforts on behalf of Boeing
in July 2007, Air Tanzania has never fully engaged Boeing in
negotiations over aircraft price, leasing options, and
related services. In addition, Boeing's communications with
the industry's largest leasing companies indicate that while
ATC has engaged brokers to lease either Airbus or Boeing
aircraft, ATC has ignored legitimate, sound offers to lease
Boeing aircraft. Boeing reports that the combination of 1)
ATC officials' public statements that they have chosen to
acquire Airbuses; 2) an advertisement in the "New African"
featuring ATC's new logo on an Airbus (ref A); and 3)
complete lack of engagement with both Boeing and lessors,
have convinced the company that ATC does not intend to engage
in a transparent process.

Comment
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5. (C) To this point, ATC has not engaged in a transparent
acquisition process. As we reported earlier, there is every
indication instead that for ATC and the Infrastucture
Minister, the decision in favor of Airbus was made months
ago. To turn this around will require continued high-level
engagement by Washington, including engagement directly with
President Kikwete. That is why we are delighted the Treasury
Secretary has agreed to raise Boeing in his meeting with

SIPDIS
President Kikwete and the Finance Minister on Thursday,
November 15 in Arusha. His message must stress the crippling
impact a non-transparent acquisition process has on
Tanzania's investment climate, and the questions it raises
about the will to tackle corruption in the run-up to a $700
million MCC Compact signing in January 2008.
GREEN