US Business

Rescuers searched for survivors after a plane carrying 43 people plunged into Lake Victoria in Tanzania on Sunday due to bad weather as it approached the northwestern city of Bukoba, police said.

“There was an accident involving a Precision Air plane which… crashed into water about 100 metres from the airport,” regional police commander William Mwampaghale told reporters at Bukoba airport.

Regional commissioner Albert Chalamila said 43 people, including 39 passengers, two pilots and two cabin crew, were aboard flight PW 494 from financial capital Dar es Salaam to the lakeside city in Kagera region.

“As we speak, we have managed to rescue 26 people who were taken to our referral hospital,” Chalamila said.

“The rescue operation is still ongoing and we are communicating with the pilots,” he said, adding that the aircraft was an ATR-42, manufactured by Toulouse-based Franco-Italian firm ATR.

Precision Air, a publicly-listed company which is Tanzania’s largest private airline, said it had dispatched rescuers to the scene.

“An investigation team consisting of Precision Air technical staff and TAA (Tanzania Airports Authority) has also departed to join the rescue team on the ground,” the airline said in a statement.

“No death has been confirmed at the moment,” it said.

Video footage broadcast on local media showed the plane largely submerged as rescuers, including fishermen, waded through water to bring people to safety.

Emergency workers attempted to lift the aircraft out of the water using ropes, assisted by cranes as local residents also sought to help in the effort.

President Samia Suluhu Hassan expressed her condolences to those affected by the accident.

“Let’s continue to be calm while the rescue operation continues as we pray to God to help us,” she said on Twitter.

– ‘Hearts and prayers’ –

The African Union Commission chair Moussa Faki Mahamat also shared his condolences, as did the secretary general of the regional East African Community bloc, Peter Mathuki.

“Our hearts and prayers go to the families of passengers on-board a plane that crashed into Lake Victoria, with our full solidarity to the Government & people of #Tanzania,” he said on Twitter.

“The East African Community joins and sends our condolences to Mama Samia Suluhu Hassan, families and friends of all those who were affected by the Precision Air plane accident,” Mathuki said on Twitter.

Precision Air, which is partly owned by Kenya Airways, was founded in 1993 and operates domestic and regional flights as well as private charters to popular tourist destinations such as the Serengeti National Park and the Zanzibar archipelago.

The accident comes five years after 11 people died when a plane belonging to safari company Coastal Aviation crashed in northern Tanzania.

In March 2019, an Ethiopian Airlines flight from from Addis Ababa to Nairobi plunged six minutes after take-off into a field southeast of the Ethiopian capital, killing all 157 people on board.

In 2007, a Kenya Airways flight from the Ivory Coast city of Abidjan to Kenya’s capital Nairobi crashed into a swamp after take-off, killing all 114 passengers.

In 2000, another Kenya Airways flight from Abidjan to Nairobi crashed into the Atlantic Ocean minutes after take-off, killing 169 people while 10 survived.

Kenya Airways pilots on Sunday extended their strike and warned of “major flight disruptions”, forcing fresh cancellations as the carrier’s deadline for disciplinary action against those participating lapsed.

Thousands of passengers were stranded as a result of the strike by the Kenya Airline Pilots Association (KALPA), which earlier said that no Kenya Airways flight flown by its members had departed Nairobi’s Jomo Kenyatta International Airport from 6:00 am (0300 GMT) onwards on Saturday.

The pilots announced the strike in defiance of a court order against industrial action and have given no indication of how long it would last.

On Saturday, the airline’s managing director and CEO, Allan Kilavuka, had urged the protesting pilots, who make up 10 percent of the workforce, to return to work by 10:30 am on Sunday.

“Failure to do so will lead to immediate disciplinary action,” he warned.

But KALPA said on Sunday that its members would remain on strike “until their voice is heard.” 

“The public should expect major flight disruptions to continue,” it said on Twitter, blaming the airline’s management for failing to resolve the stalemate.

The airline, part owned by the government and Air France-KLM, is one of the biggest in Africa, connecting multiple countries to Europe and Asia, but it is facing turbulent times, including years of losses.

The pilots’ strike has thrown over 9,000 passengers’ plans into disarray, according to the airline, with travellers turning up to the Nairobi airport on Sunday, only to find out that their flights were cancelled.

“I came here at around 5:25 in the morning… but I have been informed that the flight has been cancelled,” passenger Erick Muhanda, who was due to travel to South Africa’s port city of Cape Town, told broadcaster Citizen TV.

“It’s quite inconveniencing,” he said.

– Ground staff strike called off –

But in a measure offering some relief to the travel sector, the Kenya Aviation Workers Union (KAWU) announced Sunday that it would withdraw a planned strike by ground staff over a separate, long-running dispute with the Kenya Airports Authority (KAA) over salary increases.

“We backtracked on our decision because it was being construed as KAWU joining KALPA in their strike action,” the union’s secretary general Moss Ndiema told reporters at the Nairobi airport.

KAWU had earlier said that ground staff would strike from 2:00 pm onwards on Saturday.

The pilots are pressing for the reinstatement of contributions to a provident fund and payment of all salaries stopped during the Covid-19 pandemic.

On Monday, the airline won a court injunction stopping the strike, but an official at KALPA, which has 400 members, told AFP the pilots “were acting within the provisions of the law” and that they were yet to be served with a court order.

The carrier has warned that the strike would jeopardise its recovery, estimating losses at $2.5 million per day if the pilots went ahead with their plans.

The airline was founded in 1977 following the demise of East African Airways and flies more than four million passengers to 42 destinations annually.

It has been operating in large part thanks to state bailouts following years of losses.

A plane carrying 43 people plunged into Lake Victoria in Tanzania early on Sunday due to bad weather shortly before it was due to land in the northwestern city of Bukoba, police said, with efforts under way to rescue those onboard.

“There was an accident involving a Precision Air plane which… crashed into water about 100 metres from the airport,” regional police commander William Mwampaghale told reporters at Bukoba airport.

Regional commissioner Albert Chalamila said 43 people, including 39 passengers, two pilots and two cabin crew, were aboard the flight from financial capital Dar es Salaam to the lakeside city in Kagera region.

“As we speak, we have managed to rescue 26 people who were taken to our referral hospital,” Chalamila said.

“The rescue operation is still ongoing and we are communicating with the pilots,” he said, adding that more details would be shared later.

Precision Air, which is Tanzania’s largest private airline, released a brief statement confirming the accident.

“The rescue team has been dispatched to the scene and more information will be released in 2 hours’ time,” the airline said.

Video footage broadcast on local media showed the plane largely submerged as rescuers waded through water to bring people to safety.

Emergency workers attempted to lift the aircraft out of the water using ropes, assisted by cranes.

President Samia Suluhu Hassan expressed her condolences to those affected by the accident.

“Let’s continue to be calm while the rescue operation continues as we pray to God to help us,” she said on Twitter.

Precision Air, which is partly owned by Kenya Airways, was founded in 1993 and operates domestic and regional flights as well as private charters to popular tourist destinations such as the Serengeti National Park and the Zanzibar archipelago.

The accident comes five years after 11 people died when a plane belonging to safari company Coastal Aviation crashed in northern Tanzania.

In March 2019, an Ethiopian Airlines flight from from Addis Ababa to Nairobi plunged six minutes after take-off into a field southeast of the Ethiopian capital, killing all 157 people on board.

In 2007, a Kenya Airways flight from the Ivory Coast city of Abidjan to Kenya’s capital Nairobi crashed into a swamp after take-off, killing all 114 passengers.

In 2000 another Kenya Airways flight from Abidjan to Nairobi crashed into the Atlantic Ocean minutes after take-off, killing 169 people while 10 survived.

Twitter began rolling out a controversial new paid subscription system on Saturday that the social network’s unpredictable new owner, billionaire Elon Musk, ordered staff to build after taking over last week.

Days into the Tesla boss’s stewardship of one of the world’s leading platforms for discourse and activism, his promises and provocations are prompting a wave of reactions — including warnings from the United Nations and an apology from Twitter’s co-founder. 

His plan to dial back content moderation on the site is causing such concern that UN rights chief Volker Turk on Saturday urged him to make respect for human rights central to the social network.

“Twitter has a responsibility to avoid amplifying content that results in harms to people’s rights,” Turk said in his open letter. 

Reports of Musk laying off the platform’s entire human rights team were “not, from my perspective, an encouraging start,” he said. 

Jack Dorsey, who co-founded Twitter in 2006 and stepped down as CEO last year, tweeted to apologize for growing the site too quickly a day after roughly half the company’s 7,500 employees were fired by Musk. 

“I realize many are angry with me,” he wrote.

The remaining employees are witnessing an upheaval in their company’s culture. As early as last Friday, Musk launched his first flagship project, the redesign of the Twitter Blue subscription option.

He has reportedly told his team the redesign must be ready for potential activation by November 7 — the day before the US midterm elections — or their jobs will be on the line. 

– ‘Sprint’ to launch –

On Saturday the platform’s mobile app began offering an update that will allow users to sign up for the new version of Twitter Blue, which Musk has said will cost $8 a month, and is set to grant users a blue checkmark and perks such as less advertising in their feeds.

“Starting today, we’re adding great new features to Twitter Blue,” says the update, only on iPhones for now. “Get Twitter Blue for $7.99 a month if you sign up now.” 

In a tweet, the California-based company’s director of product development Esther Crawford specified that the new service had yet to go live.

“The new Blue isn’t live yet — the sprint to our launch continues but some folks may see us making updates because we are testing and pushing changes in real-time,” she posted.

The current version of the service, which costs $5, contains premium features, such as a more comfortable reading mode. 

Musk wants to add a blue tick that until now has symbolized account verification, though he has not explained how the paying accounts will be verified.

Verification has been free and serves as proof of authenticity for the accounts of users such as governments, journalists, celebrities and sports figures — a system put in place to prevent misinformation, but which Musk has derided as “lords & peasants.”

The update also lists other benefits mentioned by Musk, such as the ability to post longer videos and audio messages, and fewer ads.

– Ad spend suspended –

The California-based company needs to diversify its income, heavily reliant on advertising. 

And with concerns that Musk’s tinkering with content moderation will flood the site with hate speech and misinformation, several advertisers have reportedly suspended their spending on the platform since he bought it. 

Musk has insisted that content moderation remains a priority, that the rules had not changed, and that he would create a council dedicated to this task. 

But he also blamed “activist groups” for pressuring advertisers.

“We did everything we could to appease the activists. Extremely messed up! They’re trying to destroy free speech in America,” he tweeted on Friday.

The social network is losing more than $4 million a day, he said, to justify the layoffs. 

He promised Saturday that Twitter would evolve, with more convenient sharing and search tools, and ways to monetize content for creators.

Elon Musk’s decision to pull Twitter off the stock market allows him to make major changes quickly, but it also takes the company more heavily into debt, a risky choice for a money-losing business.

It is a long-established strategy with notable successes and failures, from computer manufacturer Dell (a success) to toy stores Toys “R” Us (a failure). 

But Twitter “is very different from a traditional buyout” of a company that delists from the market, said Steven Kaplan of the University of Chicago Booth School of Business.

Most such takeovers are of companies with positive cash flows, Kaplan said, but the social network is losing money — having posted losses in the first two quarters of 2022.

The equation is further complicated by Elon Musk’s $13 billion in loans, which will have to be repaid by the San Francisco company, not by the entrepreneur personally.

According to a calculation made by AFP, Twitter will have to disburse a little less than $1 billion from the first year as interest and principal, a high amount for a group whose turnover reached only $5 billion in 2021.

“That debt is tricky when you’re losing money. So there’ll be a lot of pressure to cut costs and increase revenue so that they can make debt payments,” said Kaplan, a finance professor. Otherwise, Musk will need to find funds to avoid bankruptcy.

The entrepreneur on Friday laid off about half of Twitter’s employees and is seeking new sources of revenue, including an optional subscription fee of $8 per month for those wanting a verified account.

Further development of Twitter may require an infusion of capital, more difficult to raise, in theory, by a unlisted company.

“I don’t think you can raise any more debt,” said Erik Gordon, an entrepreneurship expert at the University of Michigan Ross School of Business, but in this case “there is a Musk factor… You tweet a few times and you know, bring in the money.”

– ‘Radical changes’ –

Another idiosyncratic element is that most such deals “are initiated either by a financial logic or an industrial logic,” whereas Elon Musk “didn’t have one,” he said.

“He just was unhappy with the way Twitter was treating free speech” and concluded that he could “manage it better,” Gordon said.

As a general rule, an exit from the market is followed by “radical changes” at a company, said Sreedhar Bharath, professor of finance at Arizona State University, and those changes may not be readily apparent because the company no longer has an obligation to communicate publicly.

“The company is shielded from the punishment meted out by financial markets if they do not like the changes,” he said. “Some might say the markets have an excessive focus on the next quarter results” and managers of newly privatized firms can “pursue long-term goals” without fretting about the short term.

“But with the high public profile of Twitter, key decisions are likely to become public,” noted Jagadeesh Sivadasan of the University of Michigan’s Ross School of Business. “This was evident for the post-acquisition decisions regarding firing of key officers.”

A study published in 2019 by two researchers at California State Polytechnic University that looked at nearly 500 deals between 1980 and 2006, found that about 20 percent of large companies undergoing leveraged buyouts filed for bankruptcy within 10 years, compared with two percent for a sample of other companies.

“Most of them have done better than public companies,” said Gordon, “but they don’t get a lot of publicity… The big failures get a lot of attention and create this idea that the debt kills the company.”

“Most of the time, it works which is why people keep doing it,” Gordon added. 

“Musk is one of the most creative people on the planet,” able to build three totally different companies, PayPal, Tesla and SpaceX, all of which have reached more than $100 billion in valuation, Kaplan said.

“He’s a talent magnet… He’s going to attract (to Twitter) real talent that hasn’t been there for a while… I wouldn’t bet against him.”