REPORT TO THE MEDIA ON STATUS OF THE REVIVAL OF UGANDA

AIRLINES

INTRODUCTION

On 22nd December 2017 Cabinet approved a business and implementation plan for
the, Uganda National Airlines Company Limited (with the trade name Uganda
Airlines). The company was incorporated as a limited liability company, under the
Companies Act 2001, on 30th January 2018. This choice for incorporation was to
allow for an eventual listing and floatation of shares to the public.
Establishing the company under an Act of Parliament would make it a statutory
Corporation with no avenue for public listing as previously envisaged.

The name of the airline was proposed and registered as Uganda National Airlines
Company Limited in order to avoid any encumbrances arising out of liabilities of
the previous national airline (Uganda airlines) as was approved by cabinet on 22 nd
December 2017.
At registration, government was advised by the Uganda Registration Services
Bureau (URSB) that the name “Uganda Airlines” was available for use by
Government. And it is against this background that the airline is trading under that
brand name.

On the date of incorporation, 30th January 2018, the authorised share capital of the
company was specified as UGX 200,000,000 comprising 2,000,000 shares of UGX
100 each. These shares were to be allotted on a basis of 50:50 to the two
shareholders after capitalisation.

At the time of incorporation only two shares were allotted to the two ministers,
leaving the other shares for future allotment which is a normal practice in
business pending capitalisation of the company.
The allotment of these other shares of the company was completed on 11 th July
2018 when the share allotment Form 20 giving 1,000,000 shares to the Minister of
Finance and, 1,000,000 shares to the Minister of Works and Transport was filed
with the registrar of companies.

Financing of the project

Several financing methods were being evaluated and these included options for (i)
domestic financing and (ii) financing from international lenders. The focus was to
confirm the required external financing for aircraft purchases as envisaged in the
airline Business Plan.

In July 2018, the first instalment of the airline’s operating capital (UGX129 Billion
or approx. US$35M) was released to the company by the Ministry of Finance.
USD 29.9M of this allocation was used to pay aircraft deposits to bombardier and
Airbus in order to enable signature of the aircraft purchase agreements and allow
for the start of the aircraft manufacturing processes. USD5M was left as operating
funds.

After months of negotiating with possible lenders, government in February 2019

decided to finance the airline (both the operating capital and the aircraft
acquisitions) from internal funds. The best mechanism was to obtain funds through
“supplementary allocations” from Government Budget. This required that a request
for these funds totalling UGX283 Billion be passed through a Parliamentary
resolution accordingly.

The funds were approved by parliament on 29th March 2019. I would like to
confirm to fellow Ugandans that delivery payments for the first two CRJ900
aircraft for the manufacture and assembly of Uganda Airlines’ first two
Bombardier CRJ900 aircraft with Serial Nos. 15457 and 15461 has been
completed. We have made our final payment of USD41.55M to Bombardier.

Additionally the airline made the payment of USD20M on 5 th March 2019 to

Airbus being the agreed deposits on the two A330-800neo aircraft, so as to confirm
the contracted delivery slots for these long-haul aircraft of 2020/21.

It is important to note that all aircraft being purchased are brand new and would be
received straight from the assembly lines of the two manufacturers.
 The acceptance team from Uganda Airlines is already at the Bombardier facility
carrying out the final aircraft inspections and tests. The tentative arrival of the two
aircraft in Uganda is 23rd April 2019. An arrival ceremony is therefore being
planned to mark the arrival of these first two aircraft in the country on 23 rd April
2019.

What happens after the aircraft arrive?

It is important to note when the aircraft arrive they will not immediately start
commercial flights due to the following:

1) Completing the Air Operator Certification (AOC certification) process:

This a mandatory process and for it to be effected that the aircraft are required to
enable completion of the company’s AOC certification process with the Uganda
Civil Aviation Authority.
This process has five phases and will take approximately 90 days to complete
setting the timeline for start of commercial operations to be July 2019.

This process includes demonstrating (to the satisfaction of the CAA) that the
airline has proper operating premises, trained staff, maintenance providers, tools
and equipment as well structures, processes and systems to enable the safe and
secure operation of international commercial flights.

The airline will also be required to complete flight tests on the routes to be
operated with its crews to meet the minimum hours for issuance of the Air operator
Certificate and validation/ endorsement of the crew licences as per the regulations.

Commercial airline operations can therefore only start after completion of these
processes and issuance of the AOC.

However, during this 90 day certification process, Bombardier will be showcasing

the CRJ900 new cabin to other countries across Africa as a marketing strategy
because the aircraft we have purchased are the first in the series to have the new
cabin enhancements. Uganda Airlines will be the first airline in Africa to operate
them.
2) Once the AOC process is completed, the national carrier will need to be
designated to operate to other countries as per the provisions of the Bilateral
Air Services Agreements (BASAs) concluded between Uganda and the other
contracting states. Currently Uganda has signed forty seven (47) BASAs
with other countries which will need to be activated. Designation is
accomplished by the Aeronautical Authority (Minister of Works and
transport) notifying to her counterpart in the other contracting States through
diplomatic channels.

3) Other key activities to be completed within this 90 days include (i) the
acquisition and transport of aircraft spares (ii) the purchase, implementation
and testing of airline systems (iii) airport services contracting at all
destinations across the network (iv) supplier contract negotiation for
operational services, fuel, catering, technical handling etc. (v) branding and
uniform design (vi) set up of commercial offices and distribution network
including airline association memberships (vii) final online system design
and roll out of booking systems and payment gateways. These activities
were awaiting allocation of project finances accordingly which funds have
been approved.

I am travelling with a team from the Ministry of Works and Transport, and
Uganda airlines to conclude ceremonial matters and flag off the aircraft to
Uganda.

I thank you all for coming, I believe I have answered most of your questions in
this status update and will therefore take only five questions from the media.

Thank you.

FOR GOD AND MY COUNTRY

Monica Azuba Ntege

MINISTER OF WORKS AND TRANSPORT