Uganda Airlines’ expansion plan to dominate the aviation industry has been met with financial hurdles after a new Auditor General’s report unearthed the Airlines’ performance for the Financial Year 2023/24 showing a net loss of UGX 238 billion, which is a 26 percent% drop from the UGX 325 billion loss incurred in 2023.
The sustained losses according to the Auditor General threatens financial sustainability and shareholder value for the airline.
The national carrier also disclosed contingent liabilities of UGX.12 billion (USD 3.15 million), primarily relating to pending court cases which is likely to expose the company to significant legal costs, potentially straining the company’s financial resources.
The Auditor General noted that the Airlines’ General Sales Agents (GSAs) were awarded contracts without advance payment guarantees, exposing the Airline to financial risks.
The Auditor General also noted that Uganda Airlines signed contracts worth UGX.7.4 billion which experienced significant execution delays and some of the contracts had no regular performance appraisals and progress reports by contract managers were submitted for contracts worth UGX 4.075 Billion, which contradicts the PPDA regulations.
Outstanding balances from General Sales Agents totalled USD 158,876 (UGX.589 million) without guarantees in place. Some sales agents who transacted with Uganda Airlines after contract expiration, generated USD 378,000 (UGX.1.43 billion) in sales, with 22 percent (USD 708,692 or UGX 2.68Bn) outstanding as of 30th June 2024.
The Airline also had a low score on key strategic objectives, such as marketing improvement, route network expansion, and customer engagement.
Out of the approved UGX 594 billion budget, UGX.542.21 billion (91.3%) was realised, leaving a shortfall of UGX.51.64 billion. Of the 19 outputs with 53 activities worth UGX.456 billion assessed; only 5 activities (UGX 270 billion) were fully implemented, while 26 activities worth UGX 97 billion were partially implemented, and 22 activities worth UGX 89.8 billion were not implemented.
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Uganda Airlines has over the years been actively expanding its fleet and route network through acquisition and wet leasing arrangements. In 2024, the airline acquired an Airbus A320 aimed at boosting capacity in Southern Africa.The airline also launched direct flights to Lagos, Nigeria.
Inspite of the developments, the Airline faced a crisis after a Dubai-based fuel contractor issued an ultimatum to the airline over an outstanding fuel debt of about UGX 37 billion.
Outlook
While Uganda Airlines has demonstrated ambition and growth, its financial challenges remain a significant concern. Addressing issues such as debt management, operational inefficiencies, and delayed payments will be crucial to get back on feet.
However, the airline’s focus on modernizing its fleet, expanding its route network, and maintaining high safety standards positions it for potential recovery and growth. The path ahead is cautious optimism with continued investment in infrastructure, strategic partnerships, and enhanced financial management.
The Uganda Airlines management has indicated that it is in the process of developing a new ten-year strategy hinged on financial sustainability, operational efficiency, learning and development, and stakeholder engagement. The corresponding initiatives are geared towards revenue enhancement and better cost control.
