Uganda Airlines, the national carrier, has announced plans to launch flights to Gatwick Airport in London, UK.
However, the airline’s financial health raises concerns about its readiness for this ambitious venture.
According to a report by the Auditor General, Edward Akol, Uganda Airlines, which is managed by the Uganda National Airlines Company Limited (UNACL), is grappling with significant losses, failure to collect and account for revenue, and high operational costs.
Significant Losses
The Auditor General’s report reveals that Uganda Airlines incurred a net loss of Shs101.308 billion in the financial year 2021/2022, representing a 61.6% increase from the previous year. This significant loss was attributed to a substantial increase in direct costs, including aviation fuel, pilot training, aircraft maintenance, and depreciation.
Revenue Collection and Accounting Issues
The report also highlights issues with revenue collection and accounting. For instance, Uganda Airlines’ station in Bujumbura, Burundi, collected revenue totaling USD 3,465,671 (Shs13,051,716,986) in 2022. However, only USD 1,350,000 (Shs5,084,100,000) was remitted to Uganda Airlines, resulting in unremitted revenue of USD 1,233,318 (Shs4,644,675,588).
Outstanding Debt to Uganda Civil Aviation Authority (UCAA)
Furthermore, the report reveals that Uganda Airlines owes UCAA Shs22,824,523,000 in outstanding airport taxes collected from travelers but not passed on to UCAA.
Sustained Losses Threaten Financial Sustainability
Making losses of Shs101.308 billion in 2022 wasn’t enough; the company has continued to register more losses in subsequent years.
The Auditor General’s report for the financial year 2023/2024 indicates that Uganda Airlines made a loss of Shs 237.854 million in 2024, a 25.6% reduction from the Shs 324.940 million loss recorded in 2023.
The Auditor General Akol warned that the sustained losses are a threat to the airline’s financial sustainability and shareholder value.
It is important to note, however, that this is a pressing concern, especially considering that Uganda Airlines was allocated a budget of Shs593.84 billion for the 2023/2024 financial year, with Shs542.21 billion (91.3%) released, leaving a shortfall of Shs51.64 billion.
Can Uganda Airlines Overcome its Financial Challenges?
Despite these financial challenges, Uganda Airlines is pushing ahead with its plans to launch flights to London. However, the airline’s financial turbulence raises concerns about its ability to sustain this ambitious venture.
To overcome its financial challenges, Uganda Airlines must address its revenue collection and accounting issues, reduce its operational costs, and settle its outstanding debt to UCAA. The airline must also ensure that it has a robust financial management system in place to support its expansion plans.
Uganda Airlines’ plans to launch flights to London are ambitious, but the airline’s financial health raises issues about its readiness for this venture.
The sustained losses, revenue collection and accounting issues, and outstanding debt to UCAA are significant challenges that must be addressed.
Only then can the airline hope to overcome its financial turbulence and achieve its ambitions.