Nationwide excitement exhibited at the relaunch of the Uganda Airlines is slowly fading courtesy of reports of gross mismanagement of the national carrier.
Matters have worsened with President Yoweri Museveni’s regular attacks on the national carrier’s former management that he accuses of corruption. The local media has also not spared the airline.
This may therefore require a huge investment in public relations to change the perception of the airline in the international market.
Sceptics are sure no amount of effort will cushion Uganda Airlines from the endemic corruption that has infected almost all public institutions.
Uganda Airlines was founded in 1976 but was liquidated in 2001 when public enterprise were privatised.
Not surprising, Uganda Airlines has also posted huge losses having relaunched a few months before the covid 19 pandemic that forced all global airlines to be grounded due to that led to lockdowns in all countries.
In August 2019, Uganda Airlines was relaunched after almost 20 years later, banking on passengers from the emerging oil and gas industry and tourism.
Uganda Airlines owns six planes with the most recent acquisitions being two airbuses meant for long-haul flights.
Before celebrating its second birthday, the airline’s top entire management and board of directors were sent packing on accusations of corruption.
At the start of May, the minister of works and transport, General Katumba Wamala, sent home senior managers of Uganda National Airline Company Limited, which runs the state-owned Uganda Airlines.
They included the company’s chief executive officer, Cornwell Muleya, finance director Paul Turacayisenga, safety and compliance director Bruno Oringi, human resources director Paul Ssebowa and ground handling manager Harvey Kalama.
On May 5, the entire board, led by Perez Ahabwe, was also sent packing. The Minister said they were investigating the Airline’s leadership. “Yes, we may be taking this time to look at how they have been doing business,” he said.
Mr Museveni last week tweeted, “some elements in management and the board must face the consequences.”
“The airline was infiltrated immediately by corrupt elements. They employed their relatives. The inflated budget. I disbanded the whole gang,” Museveni reiterated his disappointment in his speech at the opening of a new parliament on May 24, 2021.
According to local media, the CEO conflicted with his board of directors in recruitment of staff and procurement.
The CEO, Mr Cornwell Muleya, accused board members of frequently overstepping their roles, involving themselves in recruitment of junior staff and procurement. He also accused them of collusion with managers to cheat the airline through inflated invoices.
For instance, a substandard system for maintaining communication between pilots and dispatchers on the ground was bought. After setup, it was discovered that it had a range of just 80 nautical miles whereas it was supposed to have a global reach. The CEO’s efforts to fire the officer were blocked by the board, who told him he had no such powers.
Secondly, ministers and other politicians wanted jobs for their relatives making recruitment of personnel contentious. The board insisted on recruiting junior staff, which was the preserve of management. Despite concluding interviews for the post, the airline does not have a company secretary because members of the board could not agree on whom to give the job.
Mr Muleya felt undermined and tried to reach out to President Yoweri Museveni.
On January 27, he wrote a brief to the president on the conflicted situation at the airline. He delivered the brief to Gen Caleb Akandwanho aka Salim Saleh (Museveni’s younger brother) for onward delivery to the president.
But Gen Saleh gave the confidential brief to Joy Kabatsi, the State Minister for works and immediate supervisor of the airline.
However, on April 26, the board and management team were shocked to receive a 12-point letter from Ms Kabatsi, raising issues which were a mirror image of the contents of Mr Muleya’s brief to the president. The letter gave the board chair an ultimatum to respond to the issues raised by May 7 or risk a sack.
Kabtsi also questioned the board’s role in recruitment and procurement for the airline, supposed delayed certification of the A330 fleet, failure by the technical department to develop operations manuals to the satisfaction of the Ugandan Civil Aviation Authority and delayed establishment of an aircraft maintenance and repair organisation as per the business plan.
Ms Kabatsi further questioned what she saw as costly recurrent training in simulators for pilots whose frequency she wanted reduced from six months to one year.
In addition, the airline had suffered another major setback after the country’s Auditor General reported that the national carrier made losses since the beginning of business.
The Auditor General noted that Uganda Airlines had performed dismally in using its assets to generate revenue with a score of -16.5 per cent, which was far below the acceptable 5 per cent score.
Uganda Airlines also grossed shs102b in losses in the 2019/20 financial year, according to the Auditor Generals’ report.
“The company was unable to realise its planned revenue, yet the expenditure on operations was way above projected costs. The company only realised $ 9.9m (10.8 per cent) of the project revenue of $92.8m,” Auditor General John Muwanga indicated in the report.
The report also indicated that Uganda Airlines incurred expenses that were beyond planned costs and actual revenue with at least $29.2m spent on direct costs while $3.6m was spent on indirect costs.
The Auditor General said that the airline had accumulated deficits during the 2018/19 financial year, which points to a risk of its inability to meet future obligations or investments.
Uganda Airlines further failed to implement its business plan in accordance with the planned timelines because it (business plan) was not annualised and the timelines within which planned activities were to be achieved were not specified, which made it difficult for the Auditor General to evaluate the progress of the same.
Hope for recovery
Despite the bumpy beginning there is hope that Uganda can recover from the initial setbacks. For government to have acted fast in getting rid of incompetent managers gives hope that the airline will get back on track
The Auditor General also says that Uganda Airlines is still ripe for financing opportunities since its debt ratio is still holding low at only 2 per cent but urged government to limit debt to manageable levels premised on improved profitability.
It should also be noted that government had planned that the airline will only break even in four or five years.
In addition to African capitals, the national carrier plans to tap into the lucrative Dubai market, destinations normally frequented by Ugandan businessmen. Dubai is also a transit route for Ugandan youth that have sought employment in the Middle East.
Uganda Airlines is also targeting tourists. Uganda Airlines still sees tourism as being the future of the airline.
The poor performance of Uganda Airlines is partly blamed on the Covid 19 pandemic that grounded all airlines in the world as a result of lockdowns.
Therefore no African airline will emerge from the pandemic unscathed. Passenger numbers are less than half their pre-2020 levels, and industry losses to January 2021 are estimated at more than $10.5bn.
Uganda Airline was affected in 2020 on account of the global lockdown implemented to mitigate the spread of Covid-19. The airline is still navigating Covid-19 related challenges that have grossly restricted movement.
Mr Waiswa Bageya, the Permanent Secretary in the Ministry of Works, says they are optimistic that the airline will still break even within set timelines if all factors remain constant.
“Covid-19 is what really affected us. Those planes were packed for a long time and we thought they would be the one to start the business before we start international flights, but if all goes well, we are optimistic that in four or five years, we shall break even,” he said.
Other airlines in the region have suffered a similar fate.
Kenya Airways has gone from being one of the region’s leading airlines and a point of national pride to one the worst performing carriers in the world.
Kenya Airways (KQ) net loss has nearly tripled to about $330 million, the worst ever in the history of the airline, on account of Covid-19 disruptions that led to a sharp decline in passenger numbers.
The carrier, which is part owned by Air France KLM, said its revenue plunged by more than half during the period, as lockdown measures reduced passengers.
Cargo volumes also went down during the period, as the carrier grounded some flights, leading to reduced belly space.
Ethiopian airways, Africa’s biggest airline, would have equally suffered huge losses had it not diversified into cargo. The airline pivoted in March 2020 to meet surging demand for air freight, repurposing 45 passenger jets to build out its cargo fleet.
The Ethiopian airline operated 360 cargo charters of personal protective equipment to more than 80 countries. The airline also made available at least 40 airplanes to distribute the vaccine.
“We were very quick, very fast, flexible and agile to move our forces, resources and everything to cargo,” Ethiopian Airlines CEO Tewolde Gebremariam told AFP in an interview. “I would say that those actions have saved the airline.”
However, the airline still lost more than $1 billion in ticket sales for the year.
RwandAir, which has reported close to $50m in losses each year since its creation, is banking on its recent partnership with Qatar Airways.
Qatar Airways has acquired 49% of loss-making RwandAir, just after buying a 60% stake in Kigali’s new Bugesera International airport.
Qatar Airways also stands to benefit from the deal since a future rapprochement will allow the carrier to bypass an embargo that forces all its flights to Africa to avoid Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.
Covid 19 found RwandAir already limping. By 2016, RwandAir had accumulated US $222 Million in losses. The government pumped in US $192 Million in grants. Additionally, the government gave the airline US $238 Million in loans, while loans from outside government were US $100 Million. This means that Rwanda government kept RwandAir afloat with US $530 Million in loans and grants between 2013 and 2016.
