One may wonder what’s on Jenifer Bamuturaki’s mind; is it the war in Congo and its impact on Uganda Airlines’ operations, the public scrutiny of her financial losses as a chief executive of a national carrier, or perhaps the airline’s expansion plans for 2025?
Bamuturaki has had some lucky years and a few rough ones too. Having bounced back as a Commercial Director of Uganda Airlines in 2019, and eventual takeover as CEO of Uganda Airlines in 2022; there was higher public expectation for a marketing guru who had spent much of her career in the aviation industry with the defunct Air Uganda and East African Airlines.
But times had changed and Bamuturaki was joining a challenging industry with no guarantee of success. An airline that would struggle to gain feet in a much competitive industry with other airlines that had the latest technology, deep pockets and wealth of expertise.
In September, 2024 while at the UK-Africa Summit in London, Bamuturaki spoke ambitiously about Uganda Airlines 10-year strategy outlining key projects such as the launch of direct flights to London at Gatwick Airport in early 2025, pending a foreign operators permit approval.
Bamuturaki sold the investment idea to the London audience at the summit that securing landing rights at Gatwick Airport could support trade opportunities between the UK and Uganda with a long history of Commonwealth cooperation.
“One of the things we want to do is fly into the UK on a daily basis so that we offer that connectivity and flexibility. We will start with full flights so that people can trade through cargo opportunities between the two countries or any other processes,” she said.
However, Bamuturaki’s first year as CEO of the Airline was met with resistance with the Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) digging its claws into an Auditor General’s report that raised a number of red flags into the financial performance of the airline.
The major concern from the Auditor General and Parliament was that out of the budgeted revenue estimates of UGX 304 billion during the Financial Year 2020/2021; only 48 billion had been collected representing a 16 percent performance. Uganda Airlines’ accounting officer, by then, explained how the airline’s operations had been grossly affected by Covid 19 with its airspace closed for several months and the anticipated operations on 18 routes had not been achieved.
Notwithstanding the revenue shortfall, the airline also suffered inefficiencies such as operating without approved self structures, lack of a Boards independence and human resource incompetence among others which hampered the expansion of the revenue base.
In the same year, the company incurred a loss of UGX 164 billion partly attributed to high cost in wages, disregard of procurement regulations, inefficiency in management and lack of a staff structure rendering no value for money to the taxpayer. Its poor marketing strategy also resulted in limited passengers on some routes despite high operational costs.
Worthy to note is that most of the airline’s top executives earned hefty salaries at the expense of the taxpayer. For instance, the CEO earned UGX 87 million, the Chief Financial Officer UGX 73 million, the Manager Finance UGX 58 million, and the Director of Maintenance UGX 80 million. Others are Manager ICT at UGX 36 million, Human Resource UGX 43 million, Manager Cargo UGX 14 million, and Manager Quality Assurance UGX 43 million.
A financial analysis of Uganda Airlines performance between 2019/2020 and 2020/2021 show the airline’s losses amounted to UGX 102 billion and UGX 164 billion respectively with an increase of UGX 62 billion in losses.
Due to losses generated, the company generated a negative return on assets of 12.2% for the year 2019/2020 and 13.1% for the year 2020/2021.
The year 2023/2024 has not been any better as the Auditor General’s report highlighted key financial aspects of Uganda Airlines’ performance, showing gaps in profitability, liquidity, and operational efficiency.
The airline reported a net loss of UGX 237.85 billion for FY 2023/24, an improvement from UGX 324.94 billion in FY 2022/23, representing a 26.5% reduction. While losses declined, the airline remains financially unsustainable.
The operating margin for Uganda Airlines improved from -138.17% to -67.17%, a 71% improvement while the airline’s Return On Assets was reported at -21.92%, indicating inefficiency in asset utilization to generate revenue ..
Out of the UGX 593.84 billion approved budget, 91.3% (UGX 542.21 billion) was realized. However, only 5 of 53 activities (worth UGX 269.8 billion) were fully implemented, while 26 were partially implemented and 22 not implemented at all. Delays in contract execution (worth UGX 7.42 billion) and irregularities in contract management has exposed the airline financial risks.
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In a recent media report, Bamuturaki pointed out that the industry recovery from COVID-19 effects has been low and has slowed down the airline’s expansion efforts into new markets such as China and also slowed down launch plans for London.
The Airline has also had to incur major cost drivers including; aviation fuel, pilot training, aircraft maintenance and depreciation. further slowed down launch plans for London.
Bamuturaki is optimistic that cementing its place in the skies, losses are not far from reach owing to new operations and more.
She attributes some of the loss to the airline’s expansion from 11 to 16 routes; in the year under review, expanding its network for Mumbai and Lagos. With the new the routes generating revenue and cargo, still the initial operational costs and route development have been high.
Bamuturaki also admits that the airline continues to incur higher fuel costs in foreign currencies while generating revenue in Uganda Shillings, with the mismatch creating foreign exchange risks.
Uganda Airlines’ blocked funds in Burundi, Nigeria, and India has resulted into operating income loss.
With her sales and marketing experience, it remains to be seen how Bamuturaki will ward off competition from other established airlines on similar routes, increase and retain passenger numbers from the current 419,170 which is a big win from the previous 77,355 passengers registered in 2019. Bamuturaki will also have to deal with re-build public confidence and trust in the airline’s services and reputation which suffered a setback last year.
Bamuturaki has set ambitious plans for Uganda Airlines, some of which are operational such as the development of cargo services as a financing arm of the Airline.
From the first commercial flight to Nairobi, Kenya in 2019, Uganda Airlines’ route network has expanded covering 13 destinations. After the addition of Abuja, Lusaka, and Harare in the third quarter of 2024, the route map expanded to 16 destinations. Insider reports reveal that the airline is set to acquire two more aircrafts on a wet lease.
The airline has also restructured its costs for better cost management such as the initiative to do self-handling and the ground handling of all their fleet at the Entebbe hub.
The airline is also undertaking a review of all their old and new contract agreements to ensure that terms and conditions are profitable to the company.
A fuel management mechanism has been put in place to improve the fuel acquisition and usage processes, while its local procurement process has increased local contracting from 10 percent to 80 percent since inception facilitating an easy and consistent supply of goods and services.
It remains to be seen if Bamuturaki will deliver as promised on the airline’s grand 10-year strategy, and if the government will fund these ambitions considering that the Auditor General continues to question the airline’s financial viability .
The Auditor General, Mr Edward Akol has also made some recommendations for the airline such as revenue enhancement, improving route utilization, marketing efforts, and customer engagement to boost income.
Additionally, Mr Akol suggests stricter cost controls to address persistent operating losses, increase asset utilization rates, review debt levels and liquidity and also streamline project implementation to avoid wasted resources.
