Ugandan carrier DAS Air has finally been grounded, just three years after the carrier won back-to-back accolades as the best cargo airline in Africa.
The failure, being blamed on a ban that stopped the carrier from operating in the European Union in 2006, brings an end to the most illustrious indigenously-owned airline in Ugandan aviation history.
Air transport sources tell The EastAfrican that UK-based management specialist Menzies Corporate Restructuring last month brokered a transaction in which DAS Air was sold to Nigeria’s Continental Air Services for $9 million.
Menzies had earlier been appointed receiver-administrator of the airline after it went into distress following its grounding by the European Union in October 2006.
It is believed the $9 million proceeds were primarily from DAS’s surviving fleet of two DC10 cargo aircraft that were parked for a while at London’s Gatwick Airport.
The sale came just nine months after the cargo carrier emerged out of EU ban that also affected 90 other airlines, mainly from Africa. The ban crippled operations, pushing up operating costs as DAS lost contracts and entered a lengthy legal battle to appeal against the EU decision.
Although DAS was eventually removed from the banned list in March 2007 after winning a legal appeal, the damage had already been done with most contracts lost, that made it difficult to survive the high cost operating environment ushered in by skyrocketing oil prices.
Four of its fleet of seven aircraft were eventually returned to leasing companies, setting off the events that led to the collapse.
Menzies temporarily suspended DAS’s liquidation last September in in orders as Andrew Duncan told Air Cargo Magazine last year, “to give DAS the chance to come up with a restructuring proposal or to sell the business as a going concern, thereby saving jobs and minimising disruption to its customers.”
DAS Air officials declined to comment on these reports or others pointing to a planned comeback, saying they would be issuing a statement in a month’s time.
It is understood that shareholders are working on a relaunch of the company’s local affiliate, Dairo Air, but it is not known whether this will be possible given the likelihood of pending claims against DAS Air applying to the new carrier.
Unconfirmed reports suggest that Dairo chief executive Daisy Roy has been scouting for a pair of Boeing 747-400 cargo aircraft to form the backbone of the relaunched operation, but she needs to put together a finance package of $15 million to get the deal off the ground.
Dairo will also have an uphill task clawing back market share from South Africa-based MK Airlines and Avient Aviation, that moved in to fill the vacuum after DAS’s troubles began.
Analysts are still trying to put together a profile of brought the company to its knees so quickly, after two decades of successful operations.
At its peak in 2003, DAS Air operated 88 flights a month into Entebbe and had an annual income in excess of $200 million.
It was valued at $260 million and rebuffed attempts by investors to buy a 40 per cent in it at the time. By the time it was banned from the EU, monthly flights into Entebbe had come down to just 16.
Meanwhile, Air Tanzania continues to await the arrival of its bridging aircraft that were expected to have arrived in Dar es Salaam last November.
The company ordered and paid deposits on a new fleet of four aircraft to be supplied by European company Airbus, which are due for delivery from 2009.
It had sought a pair of Airbus aircraft to bridge the gap until delivery, and help crew and maintenance engineers make the migration from the Boeings it previously operated. Now sources say, delivery has been held up by unresolved finance issues.
The delays have impacted on plans by Uganda-based East African Airline, which bought Air Tanzania’s sole Boeing 737 aircraft, to use it on services between Entebbe and Kinshasa.
It was partly a result of the failure to get these aircraft that ATC was in the news last December after it failed to fly 3,000 Muslim pilgrims from Tanzania and the Comoros to Saudi Arabia for the annual Hajj.
The government stepped in and spent $1.2 million to make alternative arrangements for the pilgrims