New jumbo jets the latest step as Uganda Airlines relaunches
Published On 9 Aug, 2018

 

Uganda Airlines has agreed to acquire six new aircraft from Airbus and Bombardier, as it plans its return to service after 17 years.

Uganda Airlines has got one step closer to returning to service, after agreeing to acquire six new aircraft, two from Airbus and four from Bombardier.

The airline was shut down by the government in 2001 after an attempt to privatise it as a solution to its financial problems failed, but it has been reactivated, following a January 2017 announcement by President Yoweri Museveni, although the initial operation date of December 2018 has slipped back to April 2019.

European aircraft manufacturer Airbus has agreed to provide two new jumbo jets to Uganda Airlines, following the signing of a memorandum of understanding last month.

Announced at July’s Farnborough air show, the deal provides two A330-880neo aircraft to the national airline, which will serve the airline’s international long-haul service. The aircraft are the new version of the A330 range, which began to be manufactured in late 2017.

Chief executive of Uganda Airlines, Ephraim Bagenda, said in a statement: “This agreement demonstrates our ambition for economic growth supported by a robust aviation industry. The A330-800neo combines low operating costs, long range flying capability and high levels of comfort.”

Eric Schulz, chief commercial officer of Airbus, added that “the A330neo will bring a range of benefits offering unrivalled efficiencies combined with the most modern cabin. We look forward to see the A330-800neo flying in the colours of Uganda”.

The airline has also signed an order for four CRJ900 jets made by Canadian manufacturer Bombardier, designed to service regional routes, in a deal worth around USD 190 million.

Jean-Paul Boutibou, Bombardier Commercial Aircraft’s vice president of sale for the Middle East and Africa, said the company was “thrilled that the new airline has selected Bombardier and the CRJ900 regional jets for its upcoming debut”, adding that “the CRJ Series aircraft have enabled airlines worldwide to serve communities with better connectivity, and we look forward to supporting the development of Uganda’s regional air travel with these CRJ900 regional jets”.

Bagenda describe the CRJ900 as “the world’s leading regional jet”, continuing: “As we were establishing Entebbe as a strong hub in East Africa and building more connectivity in Africa, we thoroughly reviewed our needs. With its proven track record in Africa and other regions of the world, we are confident that the CRJ900 aircraft will help us succeed.”

Both deals were announced on 18 July. The government paid commitment fees worth USD 400,000 to Bombardier and USD 800,000 to Airbus, back in March, to ensure the beginning of the aircraft manufacturing process. The purchase agreement with Airbus still needs to be finalised.

In a speech on 24 July, Minister of Works and Transport Monica Azuba Ntege said that since the liquidation of the old airline, “Uganda was left without a national airline, hence leaving the services and fares of air travel at the mercy of foreign airlines who in most cases took advantage to overcharge and at times mishandle Ugandan travellers”.

She said that the decision was made based on “the need to enhance the country’s competitiveness by reducing the cost of air transport and easing connectivity to and from Uganda” and in order to “support faster harnessing of opportunities in the economy to promote tourism, agriculture, minerals, oil and gas”, as well as meeting growing demand for passenger and cargo transport.

The minister rejected criticism from within Uganda of the choice of aircraft and insisted that detailed planning of the airline’s restoration had taken place, beginning in 2013. There has also been debate about the funding of the airline, with varying reports about how much the government will need to commit this year and next, and how that will be budgeted.

Fellow East African carrier Kenya Airways has been struggling in recent years, agreeing to a USD 2 billion financial restructuring in December last year, while South African Airwaysrequired a government bailout earlier in 2017 and remains on an uncertain footing.

At around the same time as Uganda Airlines agreements, a report by international financial analysis company Moody’s was published, which revealed the Uganda is one of a number of East African countries with an increasing debt burden, which the report said could affect credit and exchange rates in coming years, if not addressed.

Uganda had been identified in 2017 as one of the “most accessible and dynamic” sites of growth in Africa, according to a leading lawyer on the continent, and by EY as one of Africa’s most attractive countries for investment.

Last year, French oil giant Total invested in Uganda by purchasing an additional 21.57% of the Lake Albert Oil project, a deal worth up to USD 900 million.

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