Home » Aviation: East African Carrier, Uganda Airlines May Have Ended The Year With a loss of $64.3M (237b Shillings) according to Reports

Aviation: East African Carrier, Uganda Airlines May Have Ended The Year With a loss of $64.3M (237b Shillings) according to Reports

by Atqnews
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Uganda Airline

A recent Auditor General’s report for 2024 has highlighted significant financial and operational difficulties faced by Uganda National Airlines Company Limited (UNACL).

The state-owned carrier recorded losses of 237 billion shillings in the financial year, prompting questions about its long-term viability and the return on investment for taxpayers.

According to chimpreports.com, the airline reported a net loss of Shs 237bn in 2024, a 25.6%, a slight improvement from the Shs 324.940 million loss recorded in 2023.

The findings also imply that over the last two years, the airline has made losses of over half a trillion shillings.

“Sustained losses threaten financial sustainability and shareholder value,” said AG Edward Akol.

READ: Africa: Calls for Lower Visa Fees Highlight Uganda Airlines’ Entebbe-Abuja Route Launch

In its response, Uganda Airlines Management said it was “in the process of developing a new ten-year strategy hinged on financial sustainability, operational efficiency, learning and development, and stakeholder engagement,” adding, “The corresponding initiatives are geared towards revenue enhancement and better cost control.”

However, Uganda Airlines has been mentioned among the worst performing government entities such as Kilembe Mines Limited, NEC Farm Katonga Limited, Uganda Air Cargo Corporation, and Uganda Railways Corporation.

UNACL disclosed contingent liabilities amounting to Shs 11.94 billion (USD 3.15 million), primarily linked to pending court cases.

These liabilities pose a significant risk to the company’s financial resources due to potential legal costs.
Additionally, contracts with General Sales Agents (GSAs) raised concerns about financial exposure. GSAs were awarded contracts without advance payment guarantees, leaving an outstanding balance of USD 158,876 (Shs 588.79 million).
Furthermore, some GSAs transacted with UNACL after their contracts expired, resulting in USD 378,143.34 (Shs 1.43 billion) in sales, with 22.1% (USD 708,692 or Shs 2.68 billion) still unpaid as of June 30, 2024.

READ: Aviation: East African Carrier, Uganda Airlines to Launch Direct Flights to London, High Commission Announces

Project Delays
Contracts worth Shs 7.42 billion faced significant execution delays, compounded by a lack of performance appraisals and progress reports for contracts totaling Shs 4.075 billion.

This non-compliance with Public Procurement and Disposal of Public Assets (PPDA) regulations highlights systemic inefficiencies.

Key strategic objectives, including marketing, route network expansion, and customer engagement, underperformed in 2024.
The company utilized 91.3% of its Shs 593.84 billion budget, leaving a shortfall of Shs 51.64 billion. Of 53 planned activities valued at Shs 456.2 billion, only five activities (Shs 269.8 billion) were fully implemented, while 26 activities (Shs 96.6 billion) were partially executed, and 22 (Shs 89.88 billion) were not implemented at all.

A forensic audit into cabin crew training costs revealed mixed results. While the company had an approved training manual, the first phase of training (USD 32,000) failed to meet regulatory standards.

Subsequent phases (USD 36,400 and USD 80,000) addressed compliance issues and received approval from the Uganda Civil Aviation Authority (UCAA). The total training cost of USD 148,400 was deemed justifiable, with no evidence of financial loss.

An audit of the Treasury Memorandum for FY 2020/2021 assessed the implementation of parliamentary recommendations. Out of 18 recommendations, 12 were fully implemented, and six were partially implemented, resulting in a compliance rate of 66.7%.

The Auditor General’s findings underscore the need for immediate reforms to address financial inefficiencies, legal risks, and operational shortcomings.

Stakeholders are calling for enhanced accountability, improved contract management, and strategic investments to ensure the airline’s sustainability.

With mounting challenges, the road to profitability for UNACL remains steep, requiring bold leadership and a commitment to operational excellence.

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