Uganda airlines makes Ugx 267 billion losses in two years

The Auditor General, John Muwanga has noted that the Uganda National Airlines Company Limited has an accumulated loss of Ugx 102.442 billion for 2019/2020 financial year and that of Ugx 164.573 billion for the 2020/2021 financial year.

 

This has been detailed in the 2021 Audit report presented to Parliament. The Audit also detailed how the National Airline Company flouted several of the legal obligations in managing finances including but not limited to the flouting of procurement measures by the company.

In 2019, Uganda National Airlines Company resurrected flights across the world with the purchase of four bombardier CRJ 900 series aircrafts and the later purchase of two air buses neo. The airline had spent more than 18 years being dissolved.

Government of Uganda after intense engagements with the Ministry of Finance, Planning and Economic Development, the Ministry of Works and Transport, Directorate of Transport, Uganda Civil Aviation Authority, Tourism stakeholders, Parliament and the Uganda People’s Defense Air forces agreed on a USD 400 million (Ugx 1.4 trillion) investment decision to revive the Uganda Airlines.

The airline has since 2019 been operating flights across the continent and the world. However, in the latest Auditor General’s report, the airline made huge losses and, the costs of operating the business before considering interest and taxes exceeded company revenues for the last two years.

“I also observed that due to the losses incurred, the company generated negative return on assets of 12.2% for the year 2019/2020 and 13.1% for the year 2020/2021. The company’s revenue is still far below its assets,” writes the auditor general.

Amongst the audit queries raised, the airline also implemented twenty five (25) procurements outside the approved procurement plan for the financial year 2020/2021. According to the Auditor General, “the procurements were made in currencies amounting to (for each currency); Euro 1,150,854.06, Kenya Shillings 61,879.2, USD 65,441.36, Tanzanian Shillings, 7,752,600 and Ugx 346,738,939.” These according to the Auditor General contravene the procurement laws of the country.

The Auditor General also noted that Uganda airlines paid USD 8,620.7 vide payment voucher No PV07/21/072 to DAS Air as rent for equipment for a month of April 2021. On review of invoices, DAS Air had billed Uganda airlines a total of USD 43,103.5 for ground rent. “However, Uganda Airlines had not made any tenancy agreement with DAS Air.” The Auditor general further notes.  DAS Air is a company contracted by the Uganda Civil Aviation Authority to do Ground Handling Services at the Airport.

Also, the Auditor General queried the purchase of a fleet of vehicles by the organization without following procurement guidelines while the company also made a contract agreement with M/s Ninesun Manufacturing Limited for supply of inflight service equipment. “The items were said to have been delivered by DAS Air. I was not provided with evidence that the items were actually delivered.” The Auditor General further notes.

The Auditor General also faulted the company on the procurement of an Enterprise Resource Software without the Authorization of the National Information Technology Authority Uganda, posing several security threats. He also noted the provision of USD 146,230 to M/s Stelia Aerospace for supply of crucial spare parts for business class seats for A330-800 NEO aircraft without a contract.

“From the 20 procurements sampled, I noted that neither was their Accounting officers’ appointments of contract managers nor were there contract management files. The procurements were made in different currencies amounting to Euro 212,050, Kenya shillings 12,253,905.74, USD 109,803.54 and Ugx 347,242,879.” He notes.

All anomalies in the Uganda National Airline Company Limited stem from the inception of engagements between different government agencies including the Uganda people’s defense air force who argued that the revival of the Uganda airlines would not better serve the country with an increase in the collapse of airlines in Africa.

Some of the airline companies had also suspended flights to some of the major Airports across the world due to lack of passengers. The stakeholders instead argued that instead of reviving the national Airline, Government ought to make Entebbe International Airport an Aviation Hub for Africa by expanding and upgrading the Airport to world standards.

However, the then Director General of the Uganda Civil Aviation Authority prof David Mpango Kakuba and his Deputy then Fred Bamwesigye argued before then Minister for Works and Transport Engineer Ntege Azuba that the revival of the Uganda Airlines should not be looked at as a lucrative profit making venture but an investment in the Aviation Infrastructure, just like government invests in road, water and railway transport.

He also argued that the airline would also help increase the number of tourists jetting in country and in turn increase revenue, an avenue that has since fallen due to the Covid 19 pandemic.

The Airline, since revival experienced several setbacks with the suspension of the previous management led by Cornwell Muleya and several other senior staff at the company. Later, a photo of the Uganda airlines aircraft would later be seen at a Tanzanian airport grounded without fuel.

Recently, Gen Edward Katumba Wamala, the Minister of Works and Transport asked Ugandans to put trust in the Uganda Airlines and use it if it is to grow to soaring heights.

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