Uganda Airlines, East Africa’s smallest flag carrier, recently secured a relatively favourable deal in its order for eight Boeing aircraft, getting early delivery slots despite a global backlog that has left many airlines waiting for over a decade for new planes.
The first batch of the Boeing 737-8 MAX and 787-9 Dreamliners the carrier ordered last month will be delivered in 2032, giving Uganda Airlines a six-year delivery window, well ahead of many airlines, as Boeing and Airbus grapple with an order backlogs equivalent to about 12 years of global production capacity.
The Ugandan order, announced by Boeing last week, comprises four 737-8s and four 787-9s. The airline says the delivery timeline will give it opportunity to strengthen its network, develop its workforce, build supporting infrastructure and progressively grow market demand.
“The aircraft we have ordered are not due for delivery until 2032 and 2033, giving the airline sufficient time to strengthen our network, develop our workforce, build supporting infrastructure and progressively grow market demand,” Uganda Airlines Chief Executive Girma Wake told The EastAfrican.
But the six-to-seven-year lead time is relatively short given the scale of orders already held by the world’s two largest aircraft manufacturers, Boeing and Airbus.
Boeing had a backlog of more than 6,800 aircraft orders by the time Uganda Airlines placed its order, including 4,882 B-737s and 1,145 B-787s.
Forecast International estimates that clearing Boeing’s current order book would take close to a decade at prevailing production rates.
For an airline that has operated commercially for barely seven years and still struggling to stay aloft, securing production positions for both narrowbody and widebody aircraft is significant, particularly as airlines globally compete for limited manufacturing capacity.
A source familiar with the matter, who spoke on condition of anonymity due to the sensitivity of the issue, said Uganda Airlines secured favourable terms with the help of the United States government, which is supporting the transaction through financing and guarantees.
The US Export-Import Bank is said to be involved in the transaction and is expected to provide up to $390 million in financing support towards the acquisition of the eight aircraft.
The involvement of the US government potentially gives the deal a significance beyond the purchase of aircraft, particularly given Uganda’s longstanding strategic relationship with Washington.
The source also intimated that US involvement extended beyond financing, with Washington seeking to secure strategic interests in Uganda in connection with the aircraft transaction, including potential drone operating rights in Kidepo, which has become an area of interest for surveillance operations.
“The deal is backed by the US government and I expect military aid and rights to play a big deal in it,” said the source. “Boeing can theoretically deliver anytime they want. There are plenty of customers who are in default and whose slots can be shuffled for the right considerations. Moving UR up the ladder shouldn’t be a problem.”
The EastAfrican could not independently verify the allegation that drone operating rights were linked to the aircraft transaction.
Uganda has long hosted US surveillance operations, including the use of unarmed drones from Entebbe. Security research organisation Public Intelligence has previously documented the presence of US surveillance drones in Uganda.
Mr Wake confirmed that the airline is exploring export-credit backed financing structures for the aircraft, in addition to the $119 million in budgetary support it has received from the Ugandan government to fund pre-delivery payments.
“The options being evaluated include finance leases, operating leases, export credit-backed structures, and other industry-standard aviation financing mechanisms,” he said.
Boeing’s involvement is also commercially significant for the US manufacturer because the Uganda Airlines order is its first direct Boeing purchase, making the carrier a new customer for both the 737 MAX and 787 Dreamliner.
The order comes as Uganda Airlines seeks to move beyond its current predominantly regional network and build Entebbe into a larger international hub. For the carrier, the fleet expansion is highly consequential. It is the gateway to expanding its network and eventually reducing its dependence on government support.
The airline currently operates a fleet of six aircraft, including two Airbus A330-800 widebodies, alongside smaller aircraft used on regional routes. It has also relied on wet-leased capacity, including aircraft from Ethiopian Airlines, while some of its owned aircraft have been unavailable for operations due to groundings.
It currently serves 17 destinations, mostly within Africa, with London among its longest routes. It is banking on the new fleet to expand beyond regional markets, with direct services to destinations such as New York among its medium-term ambitions, according to sources.
The expansion is also central to the airline’s path to profitability. While it waits for its Boeings, Uganda Airlines plans to lease additional aircraft to support network growth.
“The airline is pursuing a phased implementation model through strategic leasing arrangements that will commence in 2026 and gradual network growth rather than introducing large amounts of capacity simultaneously,” Mr Wake said.
“This will allow the airline to continuously assess market performance and adjust its plans as needed.”
The strategy, however, carries its own risks. Some aviation analysts have questioned the rationale for expanding capacity before Uganda Airlines has established sustained profitability, drawing comparisons with Kenya Airways’ failed 2011 Project Mawingu expansion strategy, which left the Kenyan carrier with a heavy debt burden after its ambitious growth plans unravelled.
Mohamed Hersi, a Kenyan aviation commentator, said Uganda Airlines needed to establish a clear route development strategy and the partnerships necessary to turn Entebbe into a viable transit hub before taking on significant additional capacity.
“In the absence of that, they’ll just own nice aircraft that bleed money. They should have their routes clear, all the rights and codeshares to develop the traffic to and from Entebbe,” Mr Hersi said.
Mr Wake said the carrier is aware that fleet growth alone will not guarantee financial success and that expansion will be tied to the performance of individual routes.
“Sustainable growth is not measured simply by the number of aircraft an airline acquires, but by its ability to deploy those aircraft profitably and efficiently,” he said.
“We recognise that aircraft acquisition by itself does not guarantee success. The critical factor is ensuring that capacity growth is directly linked to a clearly defined business strategy.”
The difference between Uganda Airlines and Kenya Airways, however, could ultimately be the extent of government support behind the expansion.
Uganda Airlines has continued to receive state financial support while it builds its network, while the involvement of US export-credit financing could further ease the cost and financing risks associated with acquiring the new aircraft.
That gives Uganda Airlines more room to pursue an expansion that may be difficult for a purely commercial carrier to finance. But it also means that the success of the Boeing order will not be measured only by whether the airline fills its new aircraft.
The bigger test will be whether Uganda can turn the favourable financing, state backing and access to new aircraft into a profitable international network, and avoid repeating the experience of airlines that expanded faster than the markets they were trying to serve.
