5 February 2018

Uganda Seeks Funding to Revive Its National Carrier

Photo: Daily Monitor
A plane belonding to the defunct Uganda Airlines (file photo).

The Uganda government is seeking to raise $388 million to revive and launch the national carrier, Uganda Airlines, by September.

This follows the Cabinet's approval of a blueprint last year detailing how Uganda Airlines could start flights from Entebbe across East Africa before going international.

The airline was grounded fifteen years ago. The plan proposes an initial a fleet of four Bombardier CRJ900 and two wide-body A330-200 aircraft.

The government, which is the principal shareholder, will raise $70 million in four tranches over a three-year period. The first injection could be in the upcoming budget statement. Another $318 million required for aircraft acquisition will be raised through a mix of financing tools.

"The business and implementation plan proposes that these funds be sourced from external financiers, through a combination of banks, private equity firms, international aircraft finance lenders, lessors, government borrowing, export credit agencies and/or cash."

Works and Transport minister, Ntege Azuba, has been tasked with the responsibility of supervising the project for which a taskforce was appointed in 2016. It is the taskforce that drew up the financing plan.

Ethiopian's bid

The plan, sources told The EastAfrican, also laid out the financial forecasts based on route structures, expected level of operation, future market conditions and "observed industry historical performances."

However, it could take a while longer before Uganda Airlines takes to the skies again taking into account the capital requirements, the 15 years that the carrier has been grounded, the failure to launch in September last year as planned, and the envisaged financing model.

Eventually, Uganda Airlines should join other carriers in the region like RwandAir, Kenya Airways which recently secured rights for direct flights to the United States market, and continental powerhouse Ethiopian Airlines.

Ethiopian Airlines announced last month it would assist a score of African countries, including Uganda, to establish or revive their national airlines. It followed up on the announcement by taking a 45 per cent equity in Zambia Airways.

Mr Ntenge said the re-establishment of Uganda Airlines aims at improving air transport connectivity to and from Uganda in order to enhance the country's competitiveness.

Single Air Market

Just last week, 23 African countries signed on to the single African air transport market that is intended to drive down air fares by allowing the airlines of signatory countries to freely access each other's airports.

Uganda and Tanzania have not assented to the treaty.

"We have seen 23 member states pledge to commit to the Single Air Market, the implementation of which will increase the number of routes, reduce the cost of air travel and contribute to the expansion of intra-African trade and tourism," said Moussa Faki Mahamat, chairperson of the African Union Commission after the signing.

Rwanda President Paul Kagame and AU Chairman said affordable air travel was important for the overall development of the continent especially where international airlines have proved to be expensive or non-existent.

The countries that pledged to the Open Skies initiative are Benin, Botswana, Burkina Faso, Cape Verde, Republic of Congo, Ivory Coast, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Niger, Nigeria, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.

Recently Jambo Jet, which is part of Kenya Airways, announced twice daily flights between Nairobi and Entebbe beginning February 15 as part of its regional expansion. The low-cost airline will depart from JKIA at 9 am and 5.30 pm, and from Entebbe Airport for Nairobi at 11 am and 7.20 pm daily.

Uganda

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