‘Worse Before Better’: Uganda Airlines braces for wider 2024/25 losses

September 7, 2025 in Business, Companies, Travel & Tourism by Editor

The first two of an eventual fleet of four Canadair Regional Jets series 900 aircraft are now expected to arrive in Uganda mid-April

As the uproar of Uganda Airlines UGX 237 billion loss for the 2023/24 trading year dies down, the carrier is projecting a further widening in its loss position for the year to June 2025. The loss will be driven mainly by the start-up costs of new routes and a higher maintenance bill as the fleet ages and aircraft fall due for mandatory checks.

According to unaudited results for 2024/25, losses were expected to go up 14pc to UGTXs 271.1 billion.  This negative movement will however, be offset by a 17 percent increase in revenues to UGX 430.8 billion, up from UGX 367.6 billion in 2023/24 and a 23 percent surge in passenger numbers to 515,000 passengers.

UR launched new services to Abuja, Lusaka and Harare last September, and London Gatwick on May 18 this year, taking the route network to 17 destinations. Though the routes have since gained traction, generating cross-network feed especially on the recently launched route to London, they racked up significant costs during the gestation period.

Further cost pressures are expected as Uganda Airlines’ fleet of Bombardier CRJ-900s enters the mandatory engine overhaul cycle. The aircraft were received in two closely spaced tandem deliveries in early 2019. As the backbone of the regional network, they have rapidly racked up engine time and cycles. Last month, the carrier carried out its first in-house engine swap on airframe 5X-KNP—a move officials say will save hundreds of thousands of dollars, since only the powerplant, rather than the entire aircraft, will need to be shipped to maintenance facilities abroad.

According to sources familiar with the situation, the loss position will continue into the current financial year which started on July 1, 2025, if planned routes to Accra, Cape town and Riyadh tagged to Jeddah, are started.

“If those three routes are launched, loss will grow but marginally because it means leasing additional aircraft,” the sources said. “That will free capacity within the CRJ fleet, to support an increase in frequency on shorter regional routes. “That will increase revenue, meaning that loss levels will remain at about the same level as 2024/25.”

Among routes slated for increased frequency are Nairobi and Juba, which will grow to 3 flights daily, Kinshasa which will increase from 5 weekly to daily and Mogadishu which will also go daily.

UR, which operates six owned and one leased aircraft, is at a critical junction where it cannot open new routes or expand via frequency growth within the existing network. Plans for flights to China are on hold while London Gatwick, which has picked up rapidly, cannot grow beyond the current four flights to daily. The carrier has now opted for leasing as bridging solution until it finalises orders for own with OEMs for another six aircraft.

Plans are afoot to lease an Airbus A321-neo to complement the current leased A320-ceo. The two aircraft will be operated on Damp-lease with only the flight-deck crew coming from the lessor while cabin crew will be the airlines own staff.  The move is part of a gradual shift to dry leases where the air aircraft will be fully manned by airline staff.

That will also have positive impact on the bottom-line   since dry leases are considerably cheaper that wet-leases. Their longer duration also lowers costs. The lack of capacity for dry leases has trapped the carrier to west-leases which according to Uganda Civil Aviation Authority regulations, cannot be longer than six months.

Although the government will enter conclusive negotiations with Boeing and Airbus in the coming days, deliveries are not expected until after 2030. Under consideration is an order for ten aircraft comprising 4 medium range airframes from the A320 and 737 families, 4 widebodies, a 737-800 freighter and a 777 freighter.

Sources say the delays in procuring the fleet is not for lack of money, but extreme caution on the part of the shareholders

Speaking this publication in March, chief executive Jenifer Bamuturaki said the airline is able to meet 75 percent of its costs from internally generated revenues and current cashflows can support leases for an additional 3 aircraft.

But costs remain a headache. Although fuel costs have come down since the carrier switched suppliers after joining the AFRAA Fuel Plan, aviation fuel still constituted 36 percent of the cost base in 2023/24, followed by depreciation at 22 percent, salaries and crew allowanced at 13 percent and marketing and administration at 12 percent.

Officials say while they are “doing whatever we can to bring down costs,” there are elements in the cost structure such as crew training which touch mandatory requirements and cannot be avoided.

Instead, the airline is trying to reduce costs by reducing discretionary travel for staff, negotiating better contracts with suppliers and pilots flying more efficient take-off and landing profiles to reduced fuel consumption, among others.