By Christine Kasemiire,
KAMPALA Uganda
Uganda Airlines grossed Sh102 billion ($27.86 million) in losses in the 2019/20 financial year, according to the Auditor Generals’ report.
The airline, which trades as Uganda National Airlines Limited, has seen losses expand since it was revived, according to the report released last week.
The
report, which highlights the airlines’ performance in the last two financial
years, indicated the national carrier posted a sharp rise in losses from Shs15b
in the 2018/19 financial year to Shs102b in the 2019/20 financial year.
“The
company was unable to realise its planned revenue, yet the expenditure on
operations was way above projected costs. The company only realised $ 9.9m
(10.8 per cent) of the project revenue of $92.8m,” Auditor General John Muwanga
indicated in the report.
The
report also indicated that Uganda Airlines incurred expenses that were beyond
planned costs and actual revenue with at least $29.2m spent on direct costs
while $3.6m was spent on indirect costs.
The
airline, Mr Muwanga noted, had accumulated deficits during the 2018/19
financial year, which points to a risk of its inability to meet future
obligations or investments.
Uganda
Airlines, the report further noted, had failed to implement its business plan
in accordance with the planned timelines because it (business plan) was not
annualised and the timelines within which planned activities were to be achieved
were not specified, which made it difficult for the Auditor General to
evaluate the progress of the same.
Uganda
Airlines was founded in 1976 but was liquidated in 2001 during a broader push
to sell struggling state-owned enterprises.
However,
government in 2018 yielded to demands from various stakeholders including
tourism players and National Planning Authority that had expressed frustration,
especially in marketing Uganda as a tourism destination.
In
August 2019, Uganda Airlines was relaunched after almost 20 years later,
banking on passengers from the emerging oil and gas industry and tourism.
The
revival plans were hinged on recommendations of a joint study by Uganda
Development Corporation and National Planning Authority.
Its
projections were that Shs1.4 trillion, which they advised be borrowed from
international creditors, would be good enough to get the project off the
ground.
Currently,
Uganda Airlines owns six planes with the most recent acquisitions being two
airbuses meant for long-haul flights.
However,
the Auditor General noted that Uganda Airlines had performed dismally in using
its assets to generate revenue with a score of -16.5 per cent, which was far
below the acceptable 5 per cent score.
The
Auditor General also noted that the airline was found to hold the worst
interest cover, which means it will find it difficult to service its
loans.
However,
Mr Muwanga said Uganda Airlines was still ripe for financing opportunities
since its debt ratio is still holding low at only 2 per cent but urged
government to limit debt to manageable levels premised on improved
profitability.
Uganda
Airline was affected in 2020 on account of the global lockdown implemented to
mitigate the spread of Covid-19. The airline is still navigating Covid-19
related challenges that have grossly restricted movement.
It
should also be noted that government had planned that the airline will only
break even in four or five years.
Mr
Waiswa Bageya, the Ministry of Works permanent secretary, which holds the largest
mandate on the operations of Uganda Airlines, at the weekend told our reporter
government was optimistic that the airline will still break even within set
timelines if all factors remain constant.
“Covid-19 is what really affected us. Those planes were packed for a long time and we thought they would be the one to start the business before we start international flights, but if all goes well, we are optimistic that in four or five years, we shall break even,” he said.
No comments:
Post a Comment