The inquiry into the under-fire, loss-making airline was done by the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (COSASE) led by Joel Ssenyonyi. According to the report, the governance challenges are glaring, spurred by a blatant disregard for the law, a lack of transparency, and inefficiency.
“Although the government has capitalized the airline and provided sizeable financial support, the high cost of wages, disregard of procurement regulations, inefficiency in management, and lack of a staff structure have rendered no value for money to the taxpayer. Uganda Airlines has a poor marketing strategy. As a result, there are limited passengers on some routes despite the high operational costs of the airline,” reads part of the report.
“Whereas the airline is still in its infancy and requires time to acquire new routes and break even, it is essential that the financial systems and human resources of this entity are sound in order to get the national airline to the next level of growth,” the report found.
The government resurrected the national airline in 2018 to enhance the country’s competitiveness by reducing the cost of air transport and easing connectivity to and from Uganda. And to support the faster harnessing of opportunities in the economy and establish air transport infrastructure to meet the growing demand for air travel.
The airline assumed the status of a national carrier following the grounding of Air Uganda in June 2014. Jointly owned by the ministries of Finance, Planning and Economic Development and Works and Transport, Uganda Airlines launched its commercial operations on August 27, 2019. The airline began operations with six new planes, two of which were wide-body, long-range A330-800s and the other four were CRJ900s.
On July 27, 2019, the Uganda Civil Aviation Authority awarded Uganda National Airlines Company (UNACL) an Air Operator Certificate, finalizing a three-month, five-step certification process that cleared the airline to commence commercial operations.
During the re-establishment of the company, the business plan emphasized that the airline should be managed by a highly competent team, free of political interference. The Auditor General, after due consideration of the financial statements of the UNACL for the financial year 2020–2021, issued a qualified opinion. The Public Accounts Committee—Commissions, Statutory Authorities and State Enterprises (PAC-COSASE)—considered the report and launched its investigations into the airline.
The Auditor General’s report revealed that the company incurred a loss of Shs 164.5 billion in the 2020–21 financial year. The company’s operations generated approximately Shs 46.9 billion. The financial analysis of UNACL’s financial performance found that the company made a loss of about Shs 102.4bn in the financial year 2019–2020.
The committee interviewed the ac- counting officer and management of UNACL, the board, General Katumba Wamala, minister of Works and Transport, Cornwell Muleya (former CEO, UNACL), and Ahabwe Pereza, former board chairman, UNACL.PERFORMANCE OF INTERNAL REVENUE
The Auditor General reviewed the internal revenue estimates, revenue sources, and rates charged at the agency level for the financial year 2020-2021 and noted that out of the budgeted revenue of Shs 304.6 billion during the financial year 2020-2021, only Shs 48,605,410,000 was collected, translating into a performance of 16%.
The accounting officer said the effects of COVID-19 grossly affected performance. The airspace was closed for several months. Uganda Airlines had anticipated being operational on 18 routes. But this growth wasn’t achieved. Besides this, the Airbus aircraft could not be deployed without the Approved Operators Certificate (AOC).
The management said it has put strategies in place to rationalize costs and improve revenue generation. Management is taking up self-handling and approved maintenance organization (AMO) projects to minimize costs and generate more revenue for the airline.
The committee noted that notwithstanding the explanation of the accounting officer and the justifiable reason for the revenue shortfall, general corporate governance inefficiencies like operating without approved staff structures, lack of board independence, and human resource incompetence have hampered the expansion of the revenue base.
The MPs recommended that management open up new routes, that are commercially viable to increase the revenue base and improve the airline’s professional marketing.
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