Air Uganda suspends operations indefinitely

Air Uganda has announced the indefinite suspension of operations with immediate effect.

the airline was the country’s only jet airline serving international routes, flying from Entebbe to Nairobi, Mombasa, Dar es Salaam, Kilimanjaro, Juba, Mogadishu, Bujumbura and Kigali.

Air Uganda’s CEO Cornwell Muleya, issued the following statement:

Announcement from Air Uganda – Indefinite Suspension of Operations

1. Air Uganda was started at the request of the Government of Uganda in 2007 and has a staff complement of 231, the vast majority of whom are Ugandan. Employees in other Eastern African countries and destination cities are drawn from the local labor pool. Air Uganda’s normal operations are from Entebbe as its home base to Nairobi, Dar es Salaam, Bujumbura, Kigali, Mogadishu, Kilimanjaro, Mombasa and Juba. Since inception, Air Uganda has flown over three quarters of a million passengers, strengthening ties within Eastern Africa and providing direct access for Ugandans to countries in the region, making Entebbe into an aviation hub. Air Uganda has paid over US$23.5 million in fees and taxes to the Ugandan Civil Aviation Authority (CAA), invested US$4 million in staff training, contributed over US$10 million in employment taxes, and injects over US$15 million per annum directly into the Ugandan economy.

2. Air Uganda prides itself on its excellent safety record. It is certified by the aviation industry’s hallmark IATA Operational Safety Audit (IOSA) program which is an internationally recognized and accepted evaluation system designed to assess the operational management and control systems of an airline with specific reference to passenger safety. Air Uganda was IOSA certified after its first audit in 2011 and has had its certificate renewed for a further two years up to 2015. IATA is the International Air Transport Association, and its 240 voluntary members account for 84% of global air traffic. All IATA members are IOSA registered and must remain registered to maintain IATA membership. Air Uganda is a member of IATA.

3. An audit of the Ugandan Civil Aviation Authority’s policies and procedures was conducted between 11th and 17th June, 2014 by the international regulator ICAO (International Civil Aviation Organization) based in Montreal. Such audits are aimed at assessing the CAA’s capacities rather than the airlines that operate under its supervision. It is now apparent that the audit revealed shortcomings in the CAA’s oversight and regulatory capacities, consequently impacting the CAA’s ability to award Air Operators Certificates. The Ugandan CAA regrettably opted on 17th June to withdraw, without consulting the airlines affected, Air Operator’s Certificates (AOC) for all international commercial air operators registered in the country. Air Uganda, which is the only scheduled passenger airline affected, has inevitably suffered the greatest damage. Each carrier was requested to submit a fresh application for an AOC, and in the meantime was required to cease operations, thus forced to incur massive financial losses on a daily basis and suffer reputational damage.

4. Air Uganda has been working with the Ugandan CAA since 17th June, 2014 to implement revised procedures at the CAA required by ICAO and had expected its AOC to be reinstated in a timely and expeditious manner. Unfortunately, 31 days have elapsed and recertification is still several weeks away.

5. The result of this prolonged period of grounding has in turn affected key contracts at Air Uganda. In particular, covenants in the aircraft lease agreements require that the aircraft can remain on lease to Air Uganda only as long as the airline continues flying. The extended period of the aircraft remaining grounded has thus, sadly, triggered these covenants and Air Uganda is now contractually obligated to return the aircraft to the Lessors’ chosen facility abroad. The prolonged inability to generate any revenues has necessitated the airline’s Board of Directors to suspend indefinitely Air Uganda’s operations. This will unfortunately adversely impact key stakeholders, including the airline’s workforce. This is all the more regrettable, as Air Uganda, after its seven years of operation, was actively looking at upgrading and enhancing all aspects of its operation.

6. Air Uganda is extremely grateful for the patronage and support of its customers and highly regrets the frustration and inevitable inconvenience suffered since the grounding. Air Uganda assures the public that it did everything under its control in the most difficult of circumstances to minimize the impact on its clientele.

Cornwell Muleya
Chief Executive Officer
Air Uganda
July 18th, 2014

Source: eTN