Uganda Airlines dismisses debt claims by the Auditor General
Airlines worldwide lost more than $126 billion last year as the Covid-19 crisis prompted countries to lock down cities, close borders and ban international flights. PHOTO/FILE
What you need to know:
The losses. In explaining some of the losses contained in the Auditor General’s report, Uganda Airlines said it had only started commercial operations in August 2019, after attaining Air Operator Certificate, thus it was only investment costs that had been recorded for the period.
Uganda Airlines has disagreed with the Auditor General’s findings in which it had been indicated that the national carrier holds a debt ratio of 2.37 per cent.
In a statement, Uganda Airlines, which trades as Uganda National Airline Company Limited, said it is a fully-owned government entity and is not indebted as it had been highlight by the Auditor General.
“Uganda Airlines is fully capitalised by its shareholders and has no debts on its balance sheet. All the aircraft and other assets were paid for by cash from shareholders,” the statement reads in part, noting that the national carrier does not hold any loans or interest payments to any financier.
The Auditor General’s report had highlighted a debt ratio of 2.37 as of June 2020 and -608 interest cover, which implied that the company had Shs168m in interest payment due yet profit before interest was already Shs102.2b.
When contacted for a comment, the Office of the Auditor General said they cannot discuss the audit findings as they cease to be under their jurisdiction after the report has been handed over to Parliament.
“We handed over the report to the Speaker of Parliament. Any further discussions of the report are handled by the relevant Parliamentary committee” Ms Gloria Namugera, the Office of the Auditor General communications manager, told Daily Monitor yesterday.
In documents to Parliament in 2019, then minister of works Monica Azuba Ntege said that the national carrier would have two shareholders holding two million shares, with the Ministries of Finance and Works owning one million each.
Yesterday, Mr Waiswa Bageya, the Works Ministry permanent secretary, under which Uganda Airlines is supervised, said the money that had been used to revive the national carrier had been picked from the Treasury.
Therefore, it was not immediately clear how the Auditor General had arrived at the opinion that had been highlighted in the report to Parliament.
Uganda Airlines, in the statement also explained the Shs102.4b loss posted during the 2019/20 financial year, noting the airlines’ operations had been due to lack of activity due to grounding of the aircrats on account of closure of aviation space occasioned by Covid-19.
The airline also noted that the Shs15b loss, which had been highlighted by the Auditor General for the 2018/19 financial year, had been incurred during the pre-operation period from January 30, 2018 to 30 June 2019, saying the national carrier during the time was non-operational as it was in acquisition and preparation stages.
“Given that the Auditor General’s first report was for the 17 months up to June 30, 2019, it means, therefore, that it covers the period when the airline was investing in its set up activities and was not flying,” the statement said, adding that it had not yet obtained an Air Operators’ Certificate in order to mount flights and open routes.
During the period, Uganda Airlines said it was working on securing codes from International Civil Aviation Organisation and International Air Transport Association, which would be used to identify the airline in the industry.
