Chris Yates/KAMPALA

Uganda Airlines believes that it can complete its privatisation sale by the end of the year. The carrier's existing partner, Alliance Air, is seen to be in the lead position with a stake of up to 49%.

The Ugandan Government is keen to sell off its cash-strapped flag carrier and had hoped to complete the sale in September, but the airline says that "-indications now are that it may go up to December".

The airline has struggled over the past year, following the return of its leased Boeing 737-200 to Air Zimbabwe and in the face of stiff competition to its key services to Kenya and Rwanda. The state is understood to be contributing $500,000 a month, "in the form of repayable loans", says the carrier.

Companies which have qualified for the privatisation bidding include Air Mauritius, British Airways and Sabena, but the only carrier so far to have put forward a detailed proposal is Alliance Air. The joint venture, which is based in Uganda, is led by South African Airways (SAA) with 40%, but the remainder is held by the Ugandan and Tanzanian Governments together with their flag carriers.

Alliance recently took a 49% stake in the privatisation of the Rwandan flag carrier, which is now operating as Alliance Express Rwanda, although it is unclear whether the Uganda proposal follows the same model. Alliance senior marketing manager Fannie Brand is quietly confident that a deal can be struck with the Ugandan Government.

The acquisition would significantly enhance the Alliance Express network flowing from Entebbe, helping to generate further feeder traffic for the long-haul Boeing 747SP flights to London Heathrow three times a week.

Brand adds that Alliance Air has frozen plans to serve Dubai and a new European destination while it concentrates on expanding regional operations. The 747SP, on lease from SAA, could be replaced in the near future, however.

Source: Flight International