Kigali: Government has set aside $98 million as capital for the struggling and loss-making national airline RwandAir over the next three years with a view to then selling it off once it breaks even, the Finance Minister said.
Mr. John Rwangombwa says that RwandAir was expected to break even in 2013 – at which point it will be making profit.
He said the airline was pivotal to the new airport to be located at Bugesera – about 40km South of Kigali. The airport is estimated to cost $350 million.
"Around 90 percent of the engineering design works are complete and by the end of September we shall be attracting investors through private-public partnership. We expect it to be finished by 2014," Rwangombwa told Reuters news agency.
He said the government had spent some $84 million to buy two aircraft from Deutsche Lufthansa after getting a $40 million loan from the Eastern and Southern African Trade and Development Bank (PTA) earlier.
RwandAir has also acquired two Bombardier CRJ200 craft for $14 million and expects two Boeing 737 aircraft, due for delivery in 2011.
"We are spending about $400,000 a month on leasing alone," Rwangombwa said.
"We believe that RwandAir will provide the required linkage to the building of Bugesera airport as it will increase receipts from high value exports. Once the company is viable we can then go on with the privatisation process," he added.
The privatization of RwandAir was abandoned in 2008 after it emerged nobody was willing to offer the amount government was expecting from the carrier.
RwandAir's chief executive Rene Janata told Reuters that the airline was at start-up phase and was not expected to make a profit overnight.
Mr. Janata previously held senior management positions with Lufthansa.
"Our business plan projects break-even in the year three to four and profitability in year five to six. This means it will be making huge capital investment in terms of equipment, manpower and systems to bring the airline to the next level," he said.
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