Investigations: Scandals, Corruption, Nepotism Switch Uganda Airlines Into Collapsing Mode

At the start of May, the minister of works and transport, General Katumba Wamala, sent home senior managers of Uganda National Airline Company Limited, which runs the state-owned Uganda Airlines. Those on the list include the company’s chief executive officer, Cornwell Muleya, who is on a 90-day suspension.

The minister insists that managers were not suspended but asked to take accumulated leave. It’s an opportunity to ‘test the competence of their juniors who are now in charge,’ he said when asked about the rationale of sending all senior managers on leave.

And the minister previously indirectly admitted that there is an investigation. “Yes, we may be taking this time to look at how they have been doing business,” he said. The minister, however, declined to divulge the nature of the probe.

So What Went Wrong?

The focus of the investigation is corruption and patronage as well as a fight between the management and the board of directors over who calls the shots. Sources say that the board of directors want to micromanage everything from procurement to hiring juniors, something that senior managers never warmed up to. The pushback from management triggered a schism.

Lessons Never Learnt

Insiders also say politicians and well-connected people were lobbying for inexperienced relatives to be employed or to win supply contracts for Uganda Airlines. At the peak of the election season, politicians who felt they had helped the airline during the revival process went knocking on the door of the CEO to ask for campaign donations.

READ ALSO: Uganda Airlines Wins Aviation World’s Youngest Aircraft Fleet Award 2021

The current predicament facing Uganda Airlines indicates that no one heeded the red flags highlighted in a feasibility study that informed its revival. The study said, “national airlines are not free to make good business decisions due to politicians interfering in the running of the airline.” Be it a selection of competent board members, staff recruitment, procurement, demands for free tickets or lack of payment for tickets, politicians want to have influence.

According to the feasibility study, it’s never doom and gloom for flag carriers in Africa if “the national airline is run professionally by competent managers” and “insulated from political and other influences.”

Profits In The First Year? No

The Ugandan government plans to invest almost $400m into the revival of the airline. Uganda Airlines bought four Bombardier CRJ900 jets (for regional flights) and two Airbus A330-800neo (for long routes), and they were delivered in December and February. However, Uganda Airlines is yet to meet the standards to start long-haul flights.

It had been projected that the government would invest $70m as capitalisation and working capital in the first five years of the airline’s operations.

READ ALSO:Uganda Airlines Switches From UGX15B Loss To UGX102B In The 1st Year Of Operation

The Feasibility Study Envisaged That If Everything Went As Planned:

• The airline would make a profit of $3.9m and $7.2m, respectively, in the first and second years of operating regional flights.
• The airline would register a $6.1m loss in the third year after the introduction of international routes.
• But it would quickly recover in the fourth year by recording $2.4m profit and a record profit of $11.9m in the fifth year.

However, the national carrier produced losses of USh102bn ($29m) in the 2019/20 financial year, according to an audit report. The next year’s results are unlikely to be any better due to the drop in air travel caused by the Covid-19 pandemic.

Optimism

Though the airline is bedevilled by management challenges, former transport minister Monica Azuba Ntege – who was in charge of its revival process until 2019, when she was sacked – says it is “well placed to succeed”. Wamala, the current minister, argues that Uganda Airlines is facing “human weaknesses” like any other organisation, which will be solved soon.