In August, the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (COSASE) Chaired by Nakawa West MP Joel Ssenyonyi kicked off its investigations into the Uganda National Airline Company Limited (UNACL).
The investigations followed the Auditor General’s report which revealed that the company incurred a loss of Shs 164.5 billion in the 2020/21 financial year. The company generated revenue amounting to Shs 46.9 billion from its operations. The financial analysis of UNACL’s financial performance the Company made losses in the previous year 2019/2020 amounting to Shs 102.4bn.
The company incurred expenses on employees amounting to Shs 27.9 billion, indirect overhead expenses of Shs 19.8 billion and Finance costs of Shs 230 million. The total costs amounted to Shs 211.5 billion.
Auditor General said the low revenue outturn in relation to the company’s operations costs will lead to the erosion of the company’s capital in the medium term if strategies to improve revenue are not devised urgently.
The report showed that the company had payables totaling Shs 47 billion All the outstanding invoices were payable to Uganda Civil Aviation Authority (UCAA). Out of the amount, payables totaling Shs16 billion had been due for more than six months.
The report indicates that UACL implemented 25 procurements outside the approved procurement plan for FY 2020/2021. The procurements were made in different currencies amounting to Euro 1,150,854.06 (Shs 4.3billion), Kenya Shillings 61,879.2 (Shs 1.9million), USD 65,441.36 (Shs 251.3million), Tanzania Shillings 7,752,600 (Shs 12.7million) and Uganda Shs 346.7million.
The company issued a purchase order on 27/01/2021 to Stelia Aerospace for the Supply of critical spare parts for business class seats for A330-800 NEO at a price of USD 146,230.72 (Shs 561 million). By 25/11/2020, the items had already been supplied and installed. The Accounting Officer authorized the procurement on 26/11/2020.
The company budgeted to incur Salaries and Staff costs amounting to Shs 22.319 billion (USD 6,048,000). However, a review of the financial statements and payrolls for the period indicated that Shs 27,238 billion (USD 7,381,008) was incurred in respect of salaries and staff expenses. This resulted in an excess expenditure of Shs 4.919 billion (USD 1,333,008).
Lack of a salary structure
Through a review of the company’s Human Resource Policies and Procedures Manual 2019, the Auditor General noted that the company did not have an approved salary structure and job grades.
A review of the company payroll further revealed that in some cases employees in the same positions were earning different salary amounts without clear justification. For example, in the position of Cabin Crew, some employees were earning a gross of Shs 4 million while others were earning Shs 2 million.
In the position of Cabin Crew Purser, some staff was earning a gross of Shs 10 million, others Shs 7.5 million while others Shs 5 million. Captain category employees were earning Shs 65.2 million, Shs 63.4 million, Shs 62.6 million, Shs 54.1millin and others 38.9 million.
Appointment of Jennifer Bamuturaki
In July 2022, Gen Edward Katumba Wamala, the Works and Transport Minister appointed Jennifer Bamuturaki as the Chief Executive Officer (CEO) of Uganda Airlines after she served in Acting Capacity for a period of Six Months. Bamuturaki was appointed on the recommendation of President Yoweri Museveni.
She took over office after the suspension of and subsequent sacking of Cornwell Muleya some board members and staff over corruption tendencies and mismanagement of the National airline. They were suspended for three months and later extended to three more months. The company appointed several individuals to acting capacity. As a consequence, the company has lost a total of Shs 2.3 billion in a seven months period (May to November 2021) since they were receiving two salaries.
Cosase probe
At the time of investigations, the MPs established that Bamuturaki didn’t apply for the job and had no qualifications to head the national carrier. The MPs said for one to become the CEO of Uganda Airline, he or she had to have a bachelor’s degree and a post-graduate diploma.
“I was not among the 40 Ugandans who applied for the job. On the day I was going to apply, that is when I was appointed,” she told MPs
Bamuturaki only had a bachelor’s degree in Social work Bachelor of Arts in Social Work and Social Administration (SWASA) and lacked postgraduate training. During cosase meetings, she said she had no academic transcript and lost the Uganda Certificate of Education (UCE) result slip. She claimed that she was pursuing a post-graduate diploma in Public Administration at Makerere University.
During the interface, the MPs established that there is no salary structure at the company. The CEO of Uganda Airline earns Shs 87 million compared to Shs 73 million earned by the Chief Financial Officer.
The Manager of Finance earns Shs 58 million, Director of Maintenance Shs 80 million. Others; the Manager IT Shs 36 million, Human Resource Shs 43 million, Manager Cargo Shs 14 million, Quality Assistant Shs 43 million.
The committee questioned why some Pilots get Shs 60 million and others Shs 50 million. Some Cabin Crew members earn Shs 4 million, while others earn Shs 2 million. The CEO of Uganda Airlines said that Airbus has a different pay structure while CRJ Bombardier also has a different one.
The MPs also established that the Bamuturaki contracted Independent Online Journalists Association-Uganda (INDOJA-U) to do publicity for the company. The bloggers led by Andrew Irumba were gifted Shs 13 billion contract to counter negative criticisms against the company. Bamuturaki however declined to reveal the procurement process which led to zeroing in on bloggers.
She said the bloggers were not contracted through the procurement procedures, they sent in their proposal premised on fighting negative criticisms against the company.
The committee established that Bamuturaki received US$12,750 (Shs 48.6 million) per diem approved by the Permanent Secretary in the Ministry of Works and Transport to facilitate her trips to 10 countries but she did not travel.
She was scheduled to go to the Uganda Airlines offices in Johannesburg (South Africa); Kinshasa in the Democratic Republic of Congo; Juba in South Sudan, Dar-es-Salaam in Tanzania, Mogadishu in Somalia, Zanzibar, Burundi; Kilimanjaro, Mombasa, and Nairobi in the neighboring Kenyan and interact with the staff there.
Recommendations
Uganda Airlines has the potential to thrive as a sound business, only if issues of financial impropriety, disregard of the law, and staffing are dealt with robustly.
“Whereas the Airline is still in its infancy and requires time to acquire new routes and break even, it is essential that the financial systems and human resources of this entity are sound in order to get the National Airline to the next level of growth,” MPs said.
The Committee established reasonable grounds to conclude that Uganda Airlines’ management is bedeviled with governance challenges in its operations. This is evidenced by the glaring disregard for the law, lack of transparency and inefficiency.
“UNACL ought to adhere to the law and follow management procedures. The procurement function is nearly non-existent with evidence of continuous flouting of the Public Procurement and Disposal of Assets Act. The supervisory role of the Board during FY 2020/2021 was lacking and this could explain the occurrence of several slip-ups in the management of the Airline,” the reads in part.
They recommended that marketing of the infant Airline should be prioritized in order to increase sales. UNACL should adopt cost reduction strategies in every aspect of running the Airline in order to improve its financial health and keep the Airline afloat.
In 2018, Uganda mooted an idea to revive its airline and hence ordered four Bombardier CRJ900 regional Aircraft. In 2020, the government of Uganda received four Bombardier CRJ900 regional Aircraft that were ordered by Uganda National Airlines Company in July 2018 and two airbuses that were delivered in 2020 and 2021.
Following the arrival of airbuses, the country launched its long-range operations with non-stop intercontinental flights to the Middle East, Europe, and Asia.
Established in May 1976, Uganda Airlines, started operations in 1977 and was liquidated in May 2001 after efforts to privatize the company failed due to massive debts it had incurred.
Uganda Airlines is competing with Africa’s best such as South Africa Airways, Ethiopian Airways, Kenya Airways, Rwandair and others on the continent, not forgetting International ones such as Emirates Airways, Qatar Airways and Turkish Airways among others that land at Entebbe International Airport.
