10 April 2019

Uganda Secures Delivery of Its Airbus Planes

Photo: Pixabay
(file photo).

Uganda has secured its two Airbus A330-800Neo order, after paying $20 million to the manufacturers.

Monica Azuba Ntenge, Minister for Works and Transport, said on April 8 that the payment--$10 million for each aircraft--was made on April 5, firming up the order, which had been pending since July 2018.

Ms Azuba said the payment saved Uganda from price escalation and loss of delivery slots as well as the $0.8 million which was paid to Airbus in commitment fees last August, shortly after Uganda Airlines signed a memorandum for the purchase of the smallest variant of the redesigned A330.

Uganda Airlines plans to use the two aircraft for the second phase of its growth plan, with flights to the United Kingdom and the Far East.

The minister declined to discuss pricing details as well as the value of the aircraft order, saying she was bound by a non-disclosure agreement with Airbus. The manufacturers also declined to comment on the matter.

Sources familiar with the negotiations say that Uganda was at the risk of losing the order and any monies that had been deposited with Airbus, after missing a February 2019 deadline to deposit at least 30 percent of the purchase price.

Negotiations

Ms Azuba said there had been negotiations with Airbus, which led to the acceptance of the $20 million and logging of the Ugandan order, which is expected to appear in Airbus' sales figures for April.

Another payment is due in October 2019 and a further one in October 2020, when the first A330 is expected to be handed over. The other one is expected in early 2021.

The payments to Airbus were made from a Ush283 billion ($77 million) supplementary expenditure that parliament approved for the Works ministry in March after a protracted process.

The rest of the money went completing payments for the first two Bombardier CRJ-900s for which a payment of $ 29.9 million had been made in August 2018 and deposits on another two due for delivery in July and September this year.

An aircraft acceptance team comprising members of the airline management and officials from the civil aviation authority has been dispatched to Montreal to take the two aircraft through acceptance trials, certification and registration on the Ugandan register.

Those aircraft are expected to arrive in Entebbe on April 23.

During a press conference at the ministry on April 10, Ms Azuba confirmed that the Cabinet had adopted a decision to directly fund the purchases to lower the project cost.

Crew recruitment

Junior Works Minister Aggrey Bagiiree said recruitment of pilots, cabin crew and another 30 key staff has been completed. The cabin crew will begin training as soon as the aircraft arrive in Uganda.

But parliament has threatened not to appropriate funds for the airline's operations unless a substantive chief executive has been appointed.

Ephraim Bagenda, the interim chief executive, was hired as head of the airline revival task force.

Uganda Airlines is scheduled to start commercial services in June and has announced plans to operate 19 intra-African routes in the first phase.

Mr Bagiire says during this period, the carrier will negotiate interline agreements and code-share with some of the bigger foreign airlines operating into Entebbe, to offer onward lift to transit passengers across its network.

Without giving timelines, Mr Bagiire said that Uganda would study the implications of the proposed African Single African Air Transport Market, with a view to signing up.

Although critics have questioned the viability of a home-grown carrier under the current competition landscape, citing Air Uganda which had grown into the biggest airline by passenger volume before it folded in July 2014, officials are optimistic that the return of Uganda Airlines will stimulate new traffic.

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