Kigali. RwandAir is set to sign three aircraft lease agreements worth $300 million as it seeks to operate deeper into Africa by adding new routes, to create longer haul connections to Europe, America, and Asia.
In a letter to Christine Lagarde, the managing director of the IMF seeking a raise in its ceiling on new external debt, Rwanda reveals that in the first quarter of 2018, RwandAir contracted a lease for additional aircraft to expand its fleet.
This breached the country’s indicative $500 million ceiling on external debt by public enterprises by $87 million.
“The rationale behind fleet and route expansion is to operate deeper into Africa by adding new routes, and creating longer haul connections to Europe, America, and Asia.
“Although the initial plan was to acquire two aircraft during the next fiscal year, an opportunity arose to acquire new aircraft following the folding of a European airline company, so RwandAir management quickly engaged the lease contracts,” Rwanda’s Finance and Economic Planning minister Uzziel Ndagijimana said.
“Going forward, leases for three additional aircraft are likely to be signed in 2018, to replace two aging aircraft. Hence, the government requests an increase in the indicative limit to $800 million to accommodate these leases,” the minister added.
The airline is planning to retire two of its ageing Bombardier as it seeks a relatively newer fleet of Boeing aircraft. It is expected that the new airplanes will only start generating debt service payments in 2019.
The Rwandan national airline a week ago received a nod by Washington, allowing it to operate through a code-share agreement. This is a significant step as the Rwanda national carrier awaits approval for direct flights between Kigali and the US.
RwandAir sunk back into loss in 2016, posting $1.01 million loss, from an operating profit of $2.8 million in 2015.