Embattled former Uganda Airlines chief executive officer Cornwell Muleya has warned that the national carrier is operating without a business plan and may not break even in the nearest future.
Although the revived airline was not expected to make any profits from the onset, without support structures and a growth strategy, Muleya said, it will take even longer for the national carrier to break even.
Muleya was on Wednesday appearing before MPs on the committee on commissions, statutory authorities and state enterprise (Cosase) to weigh in on the Auditor General’s report for FY 2021.
Muleya, who is himself facing charges of corruption and mismanagement of the airline, pleaded innocent and instead said he was hounded out of the airline by both internal and external forces after lifting the lid on the corruption tendencies of the current CEO Jennifer Bamuturaki who was then commercial director.
For example, he cited an incidence when Bamuturaki allegedly over-invoiced the airline by up to $232,000 to pay Abbavater Group, a firm she is said to hold and own business interests for public relations and advertising services.
During her previous interactions with COSASE, Bamuturaki said she is not “legally connected” to Abbavater. It should be recalled that Muleya was opposed to Bamuturaki’s appointment even as commercial director and now CEO.
Muleya’s previous appraisal of Bamuturaki reportedly read: “she’s concerned more with politics than role and interest of the airline, works against the company, candidate lacks commitment to task and role, works as a lone ranger and pursues her interests instead of task, not-appreciative of digital marketing as the main tool for service/product promotion, and not ready with skills for the role in a start-up airline.”
Muleya told MPs that his purportedly high salary of Shs 126 million per month was justified because when he came in, Uganda Airlines had nothing workable and he had to start from scratch. He said that he first came in as a consultant and was earning Shs 70 million, and upon his appointment as acting CEO, his salary increased to Shs 118 million and then to Shs 126 million when he was confirmed in the position.
“When I came in, there was nothing like Uganda Airlines here. There was no plan, no desk or papers. Nothing! I had to build the plan, negotiate and this is not a small task. I was going into meetings reading documents of 300 pages on airline purchases on my own,” he said.
BUSINESS PLAN
Muleya further told the MPs the airline is lacking business partnerships with competing airlines and countries yet it is these partnerships that would extend the national carrier’s reach and routes.
For instance, he said the long-haul 252-seater Airbus A330 is currently only flying 33 hours a month to only one destination, Dubai and yet it is meant to fly at least 10-15 hours a day. He said with the implementation of a business plan, the airline would have been able to open up more routes and partnerships.
“Now the A330 is flying to Dubai but it is flying taking Ugandans and bringing Ugandans back mostly. That is point-to-point traffic. You have to have the benefit for all the other people who fly into Dubai and want to connect to Africa. So it means you have to create a partnership in Dubai, and that is why he had said from the beginning we’d started discussing with Emirates for a cooperation agreement and they had agreed to cooperate with us even before attaining the IOSA [operational evaluation and management of an airline] for them to feed us on a one way interline. It is the same thing when you go to Nairobi, we’re competitors with Kenya Airways, we’re competitors with other airlines flying there but we’re still cooperating in the industry because we feed each other with traffic through the interline agreement,” said Muleya.
“Without critical mass, the airline will not break even because you remain too small for the investment you have made. The business plan has to be implemented in its entirety for it to bring the payback…From the beginning, we were discussing for a cooperation agreement with Emirates for them to feed us on a one-way interline. In this, they give us passengers from Pakistan and India so that they augment the point-to-point traffic – those structures have to be put in place,” he added.
The airline has so far incurred losses of over Shs 500 billion since it was revived three years ago. Asked whether as a former CEO, his team had anticipated to start with losses and thereafter pick up, Muleya said the losses were expected since the airline’s aircraft were underutilised – flying to 9 routes out of 20 and flying just five hours out of 10.
In October this year, Uganda Airlines is expected to launch its second intercontinental route to China.
