Uganda government to invest in Air Uganda – finally

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Air Uganda President Yoweri Museveni and His Highness the Aga Khan have reportedly reached an agreement during a meeting in Paris on the sidelines of a security conference the president is attending, that the Government of Uganda will acquire a stake in Air Uganda, which would turn the quasi national airline into a regular national airline. The offer was made on start up when Air Uganda went operational in 6 years ago but never taken up until now.

This will put an end too to ongoing rumors fueled by speculators and middlemen to revive Uganda Airlines, which was thought to be a massive scam, attempting to siphon millions of dollars out of government coffers, similar to the failed investment of 700 million Uganda Shillings in Victoria International Airlines, where vested interests by individuals caused a total write off after VIA halted operations within weeks of their maiden flight and not a single shilling returned to Uganda since.

Air Uganda in contrast has, since a rocky start caused by inept Italian management, stabilized and with recent CEO’s like Hugh Fraser and now Cornwell Muleya is on a steady course towards further and sustained growth.

U7 operates a fleet of 3 CRJ200 jets, after offloading the fuel guzzling MD87 aircraft, and presently flies from Entebbe to Nairobi and Mombasa in Kenya, Dar es Salaam and Kilimanjaro in Tanzania, Kigali, Bujumbura, Juba and of late even Mogadishu, making it 9 regional destinations.

The buy-in by the Ugandan government, though still required to go through a due process, will set the stage in the medium term to eventually float an IPO and let the wider public in Uganda acquire shares through the Uganda Securities Exchange, then making it truly the national airline, key local staff of Air Uganda have always aspired for it to become.

A source from within the Ugandan government has yesterday evening already indicated that once the share acquisition has been concluded and government has appointed their directors to the board, they are likely to push for a widening of the destination network to include other key African destinations like Johannesburg, to look at the Gulf region and to evaluate a few added key destinations beyond Africa, with India, China and Europe being mentioned. Some of those destinations, when U7 has fully assumed the role of a national airline, can of course be accomplished through code shares with other airlines, and it is understood that negotiations are already underway with prospective partners towards that end. The recent AFRAA Annual General Assembly in Kenya in fact set the stage for Air Uganda’s CEO to meet fellow airline chiefs and have a few chats to open the doors for more serious talks in the future.

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