A Dormant African Airline Might Rescue Airbus From a Sales Disaster
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
There might soon be a new airline in Africa — well, not quite new, more like the revival of a defunct one. And it may also buy an Airbus plane that no one else wants.
Uganda Airlines has been grounded since May 2001, but that’s not keeping Ugandan officials from making big plans for its revival. Indeed, the government is planning to order six new aircraft and start flying again by the end of 2018.
Minister of Works and Transport Monica Azuba Ntege recently told reporters that the government is “concluding export finance negotiations” on the first four aircraft of the planned six-aircraft fleet. Those aircraft are a sensible order of Canadair Regional Jet 900s (CRJ-900).
These small regional aircraft are expected to arrive and start flying by December, although details are still light. What we know: Seating capacity will be between 80-100 passengers, and the government has already paid a $400,000 commitment fee for these four planes.
However, the other two aircraft in the planned fleet is what has us scratching our heads. Uganda Airlines is planning to order two Airbus A330-800neo for its long-haul fleet. That’s a strange choice as it’s an aircraft that literally no other airline wants. While multiple airlines originally ordered it, all have cancelled or changed their orders. The last of those airlines finally cancelled its A330-800neo order in March 2018.
And, having no orders for this aircraft isn’t necessarily a bad thing for Airbus. While substantially similar to its larger brother — the Airbus A330-900neo — it’d likely be very costly for the aircraft manufacturer to build just a few Airbus A330-800neo. So, it seems peculiar that Airbus would even try to sell this aircraft type — especially if it’s just two aircraft to a dormant African airline.
But, the Ugandan government is serious enough about this order to already have paid Airbus a $800,000 commitment fee. That’s a small chunk of change compared to the $260 million list price for just one Airbus A330-800.
Only another $3.5 million is budgeted for July 2018-June 2019 to start the airline’s operations, meaning that the aircraft purchases — of both the CRJs and any potential Airbuses — would need to be heavily financed. Government officials don’t expect to have to fund the revived airline for long. Minister Azuba notes “according to the business plan we’ll break even after 4-5 years.”
Featured image of the first A330-800 courtesy of Airbus
WELCOME OFFER: 30,000 Points
TPG'S BONUS VALUATION*: $600
CARD HIGHLIGHTS: up to $100 annual CLEAR statement credit, up to $100 annual LoungeBuddy statement credit, 3x points on travel and transit, 3x points on restaurants worldwide
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 30,000 Membership Rewards® points after you spend $2,000 on purchases on your new Card in your first 3 months.
- Earn 3X Membership Rewards® points on all eligible travel, from subway swipes and window seats to hotel stays and city tours.
- Earn 3X Membership Rewards® points at restaurants worldwide.
- Receive up to $100 per year in statement credits when you use the American Express® Green Card to pay for your CLEAR® membership at select airports and stadiums across the U.S. and Permissible Biometric Scanning Technology terms: eye scanning, irises scanning and fingerprints scanning.
- Use the American Express® Green Card to purchase lounge access through LoungeBuddy to any of the lounges in the LoungeBuddy network – no memberships, elite statuses, or first class tickets required. Earn up to $100 in statement credits per calendar year on your LoungeBuddy purchases.
- No Foreign Transaction Fees.
- $150 Annual Fee.
- Terms Apply.
- See Rates & Fees