Parliament. The newly revived national carrier is expected to register its first profit in 2029, Mr Cornwell Muleya, the Uganda Airlines chief technical officer, has said.
He made the revelation while appearing before the Budget Committee of Parliament chaired by Ntenjeru North MP Amos Lugoloobi to defend the Shs575b budget proposals for the airline yesterday.
Mr Muleya said the national carrier will require some time to build confidence from passengers and suppliers, even after recapitalisation.
“When you start initially, you have very few passengers until you entrench yourself in the market,” he said.
Mr Muleya said if the funds are availed, the national carrier will be able to operate and smoothly break even in seven years, and then register a profit after 10 years after which it will be able to run stably.
“The plan is recapitalisation and this is why the collapse of many airlines is because of undercapitalisation because they don’t factor in the period you operate without needing a lot of money,” he said.
“If we don’t get these funds, we will not be able to do this and you will not succeed because the foundation is going to be weak,” he added.
The committee tasked the officials, including the Permanent Secretary in the Ministry of Works and Transport, Mr Wasswa Bageya, and Mr Moses Sanon, the head of monitoring and evaluation at Budget Compliance at National Planning Authority to present a break down of the budget first.
The MPs also maintained that the airline must quickly put a substantive board in place to ensure there is a proper accountability mechanism.
Meanwhile, more questions linger, relating to ground handling and proposed salaries.
For instance, Ms Margaret Komuhangi (Nakasongola Woman, NRM) questioned why a pilot would be paid a monthly salary of Shs48m yet profits will be expected in 10 years.
The MP also raised concern over Shs37b allocated for ground handling.
The money has been provided for as a payout to a private contractor who will be doing ground handling for the national carrier, in what officials said would be a one year contract awaiting final takeover.
In response, PS Bageya said: “The airline handles itself; we have to procure equipment to do that work and there is a provision to terminate after we are ready.”
He said Uganda Airlines will first do its own ground handling and later move to handling the entire air sector. Mr Bageya said the airline was looking at three potential service providers for the ground handling, with a view of identifying one company for the job.
The companies include National Aviation Services (formerly Entebbe Handling Services), DAS Handling Limited and Fresh Handling Ltd.
Lawmakers are also concerned on how Shs37 billion was reached before completing the procurement process.
When approving funds for the purchase of two Bombardier planes in March, legislators directed that ground handling be done by government to ensure return on investment into the airline.