The government says shuttered national carrier, Uganda Airlines, will resume operations this November with flights to neighbouring countries.
Monica Azuba, the works and transport minister, told journalists at a briefing today that the government has to that effect placed orders for four aeroplanes from Canada’s Bombardier Inc, which will form the airline’s initial fleet. It has also ordered for two planes from France’s Airbus, said Ms Azuba, although she did not say when they will be delivered.
Ms Azuba said a cash deposit of $100,000 was made on each of the four Bombardier planes, which have a seating capacity of 80 to 100 passengers, while a total deposit of $800,000 was paid to Airbus.
A new Bombardier CRJ900 aircraft – the type ordered by Uganda – costs $46.5m according to a list price on the manufacturer’s website while the list price of a new Airbus A330-200 is $238.5m. But a feasibility study by the National Planning Authority said the cost of “one A330-200 cost is estimated at $109.5m … while a CRJ900 is at $27.96m”.
“We have already undertaken studies and it has been concluded that a national carrier is profitable,” Ms Azuba added. She said the airline is expected to break even in four to five years.
According to the study, the government will inject quity of $70 million required in operating capital for the airline. This will include $20m as start-up capital and $50m as contingency “working capital”. The working capital is “the amount equivalent to three months’ expenses in the first year at zero revenue assumption.”
The funds required to purchase the planes are to be raised from “loan finance sourced internationally at an interest rate of 5% per annum and over repayment periods of 7-10 years.”
Since 2016, the government has prioritised the revival of Uganda Airlines for, among other justifications, the promotion of tourism. It tasked the National Planning Authority to carry out feasibility studies.
The authority put the initial capital expenditure required to get the airline up and flying at $400m (Shs1.4 trillion).
Uganda Airlines was established in 1976 under the Idi Amin government but was liquidated in 2001 after racking up debts of more than $6m (about Shs21bn). The liquidation did not settle in well with several stakeholders, who have continued to blame the government for deliberately running down the national flyer.
President Museveni called the lack of a national airline “a big shame” in a 2016 cabinet address, and accused South Africa, Kenya, and Ethiopia – who he called “brothers” – for exploiting Ugandans through their national airlines.
At the same briefing, the Civil Aviation Authority launched plans to refurbish 13 aerodromes across the country, starting with the Arua and Kasese airstrips later this year. The proposed plan, which aims at increasing domestic flights, will cost an estimated $300m.