In the 2024/25 financial year, Uganda Airlines, which trades as Uganda National Airlines Company Limited, demonstrated early signs of financial stabilisation, marked by a slim reduction in losses and growth in revenue.
However, these gains were significantly weighed down by rising operating costs, fleet challenges, and persistent control and governance weaknesses, which continue to constrain the airline’s turnaround.
The airline reduced its net loss from Shs231.58b in the 2023/24 financial year to Shs230.81b in the 2024/25 financial year, reflecting a Shs768m (0.33 percent) improvement.
Although modest, this reduction is notable given the airline’s capital-intensive expansion phase and signals that losses may be beginning to stabilise rather than escalate.
Uganda Airlines registered a Shs102b loss in its first year of operation in 2020, before expanding to Shs265.91b in June 2022, and further to Shs325b in June 2023. However, the loss narrowed by Shs87b to Shs231.58b in June 2024.
Thus, the slight improvement, the Auditor General noted in a report released last Thursday, was largely supported by revenue growth of 19.2 percent, driven by expanded route operations and increased international presence, including long-haul services such as the London route.
The growth in traffic and market reach indicates increasing demand and validates the strategic intent behind network expansion.
However, the airline’s cost base, the Auditor General noted, continued to surge at a pace that largely offset revenue gains, with trade and other payables increasing sharply to Shs235.7b as of June 2025, up from Shs171.68b in June 2024.
This signals growing pressure from unpaid supplier obligations and short-term liabilities, reflecting liquidity stress and rising operating costs, particularly in areas such as fuel, leasing, maintenance, and handling services.
Fleet-related challenges further compounded these cost pressures, with the airline experiencing delays in the post-lease closure of an A320 wet lease agreement, leaving a $930,000 (Shs3.3b) security deposit outstanding and subject to recovery through legal action.
In addition, physical inspection of the CRJ900 fleet revealed that aircraft 5X-KNP had been grounded since September 2025 due to the unavailability of a critical spare part, which reduced fleet availability, increasing the risk of flight disruptions and exposing the airline to customer dissatisfaction and revenue leakage.
Fuel procurement emerged as a major risk area, with the Auditor General noting that aviation fuel supplier penalties amounting to $1.78m (Shs6.3b) from MixJet were imposed without adequate supporting documentation, increasing the risk of unsupported expenditure.
More critically, aviation fuel was uplifted, and payments totalling $17.38m (Shs61.8b) were made without a valid fuel supply contract, of which $9.29m (Shs33b) related to the 2024/25 financial year fuel supplied by Vivo Energy.
Operational control weaknesses were also evident in cash management, with cash collections amounting to $103,491.7 (Shs368.2m) at the Juba country office not banked as required and remained under criminal and legal investigation, which exposes the airline to potential financial loss.
Equity investment
Despite the scale of government support, amounting to Shs1.98 trillion invested in the airline since revival over five years ago, only Shs200m has been recognised as share capital, with the balance recorded as share application funds and government capitalisation, pending formal conversion.
The airline also registered performance lags, achieving Shs424.16b (68.49 percent) out of the approved target.
On the output side, out of 29 outputs covering 34 activities valued at Shs33.046 trillion, only one was fully implemented, 20 were partially implemented, and eight were not implemented at all, pointing to execution capacity weaknesses and constraints.
Further compounding the airline’s financial position, the Auditor General indicated that a separate verification of domestic arrears amounting to $78.56m (Shs282b) is ongoing, signalling potentially significant additional liabilities that could further strain the airline’s finances once confirmed.
The Auditor General also noted that, whereas there has been an improvement in revenues, rising payables, fuel cost exposures, fleet constraints, weak contract management, and governance lapses continue to erode these gains.
Thus, until costs are brought under tighter control, fleet availability improves, and financial discipline is strengthened, revenue growth alone will not be sufficient to deliver a sustainable turnaround.