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A Dormant African Airline Might Rescue Airbus From a Sales Disaster

May 25, 2018
3 min read
A Dormant African Airline Might Rescue Airbus From a Sales Disaster
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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).

A picture taken on March 20, 2018 shows an Iraqi Airways Canadair CRJ-900 jet plane on the tarmac at the airport in the Iraqi Kurdish city of Sulaimaniyah, three months after the lifting of a ban on international flights. Iraqi authorities had announced on March 13 the lifting of a nearly six-month air blockade imposed on Iraqi Kurdistan in response to its holding of an independence referendum. / AFP PHOTO / SHWAN MOHAMMED (Photo credit should read SHWAN MOHAMMED/AFP/Getty Images)
Image by Shwan Mohammed/AFP/Getty Images.

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.

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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."

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