AF022
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Rwandair growth and still no profits

Tue Feb 12, 2019 8:58 pm

https://www.airlineratings.com/news/rwa ... s-new-ceo/

Article indicates that WB has never been profitable and they are entering their 11th year of operation. How long is it going to take them to be profitable? Is the government so flush with cash that it can continue investing indefinitely?
 
evanb
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 9:35 pm

Not profitable is an understatement! Here are the annual subsidies they're received from the Ministry of Finance:

2010 FRw 10.8 billion
2011 FRw 25.2 billion
2012 FRw 22.0 billion
2013 FRw 27.0 billion
2014 FRw 29.1 billion
2015 FRw 33.6 billion (The 2015 subsidy was 33% of turnover!)
2016 FRw 49.6 billion
2017 FRw 86.3 billion
2018 FRw 107.0 billion

That's a total of FRw 390.6 billion which is $656.6 million at current rates. Most of this is even before the big expansion with the arrival of the A330s in 2016! They're burning money pretty quickly!
Last edited by evanb on Tue Feb 12, 2019 9:45 pm, edited 1 time in total.
 
PlymSpotter
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 9:36 pm

Rwandair is partly being used by the government to expand Rwanda's Tourist industry and expand the countries profile. As such profitability is not necessarily the most important metric they are looking at.
...love is just a camouflage for what resembles rage again...
 
evanb
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 9:40 pm

PlymSpotter wrote:
Rwandair is partly being used by the government to expand Rwanda's Tourist industry and expand the countries profile. As such profitability is not necessarily the most important metric they are looking at.


I don't disagree with that, but it's an awful lot of money. The last year's subsidy is nearly 2% of GDP.
 
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Mortyman
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 9:43 pm

evanb wrote:
Not profitable is an understatement! Here are the annual subsidies they're received from the Ministry of Finance:

2010 FRw 10.8 billion
2011 FRw 25.2 billion
2012 FRw 22.0 billion
2013 FRw 27.0 billion
2014 FRw 29.1 billion
2015 FRw 33.6 billion (The 2015 subsidy was 33% of turnover!)
2016 FRw 49.6 billion
2017 FRw 86.3 billion
2018 FRw 107.0 billion

That's a total of FRw 390.6 billion which is $656.6 billion at current rates. Most of this is even before the big expansion with the arrival of the A330s in 2016! They're burning money pretty quickly!



You mean million right ?
 
evanb
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 9:46 pm

Mortyman wrote:
You mean million right ?


Corrected typo. $656.6 million (not billion).
 
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eastafspot
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 9:52 pm

I know it's not enterily related but last month I flew them on BRU-KGL-EBB-KGL-LGW. Surprisingly premium cabins were more popular than Y, as long haul sectors LF were:

1) BRU-KGL: J=85%, W=71%, Y=30%
2) LGW-KGL: J=95%, W=66%, Y=45% ( Though most pax got off in BRU)

They are looking to improve their Gatwick slot and soon to connect the US from Accra. Further they plan to add two A330-900 NEO and two 737 max8 also. One could/should be flown to Europe during the low season ( northern hemisphere winter) and one probably to TLV or CAN via DXB/BOM's to the fleet, that's why profitability will probably arrive in a decade or so...
Fly with Air Burundi, Air Tanzania, Golden Wings Aviation, Kenya Airways, RwandAir and Uganda Airlines...Jumuiya ya Afrika mashariki !
 
PlymSpotter
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 10:03 pm

evanb wrote:
PlymSpotter wrote:
Rwandair is partly being used by the government to expand Rwanda's Tourist industry and expand the countries profile. As such profitability is not necessarily the most important metric they are looking at.


I don't disagree with that, but it's an awful lot of money. The last year's subsidy is nearly 2% of GDP.


It may seem drastic, but so long as the benefit outweighs the 'investment', it can work.

Looking at the figures, in 2017 tourism brought in $438m with an overall GDP of £9.137bn. So it accounts for 4.7% of GDP and is growing rapidly - and this is just for tourism, not including trade enabled by better airlinks.
...love is just a camouflage for what resembles rage again...
 
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eastafspot
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Re: Rwandair growth and still no profits

Tue Feb 12, 2019 10:07 pm

PlymSpotter wrote:
Rwandair is partly being used by the government to expand Rwanda's Tourist industry and expand the countries profile. As such profitability is not necessarily the most important metric they are looking at.

Very true! In that way, last year Rwanda has launched a policy in which citizens of all countries travelling to Rwanda for short trips will no longer need to apply for a visa and will be issued a 30-day visa upon arrival.
Fly with Air Burundi, Air Tanzania, Golden Wings Aviation, Kenya Airways, RwandAir and Uganda Airlines...Jumuiya ya Afrika mashariki !
 
AF022
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 11:00 am

PlymSpotter wrote:
Rwandair is partly being used by the government to expand Rwanda's Tourist industry and expand the countries profile. As such profitability is not necessarily the most important metric they are looking at.


Must be great to work for a company that isn't worried about profitability.
 
ewt340
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 11:14 am

Maybe it's because the fact that they have horrible fleet plan.

1 330-200, 1 A330-300, 2 B737-700, 4 B737-800, 2 CRJ900ER, 2 Q400.

So, 4 type of different type of aircraft at small number from 3 different manufacturers.

Should have gone with all Airbus or All Boeing.
 
jupiter2
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 2:17 pm

ewt340 wrote:
Maybe it's because the fact that they have horrible fleet plan.

1 330-200, 1 A330-300, 2 B737-700, 4 B737-800, 2 CRJ900ER, 2 Q400.

So, 4 type of different type of aircraft at small number from 3 different manufacturers.

Should have gone with all Airbus or All Boeing.


Seen worse fleet plans, looking at you TG.

As for the current fleet, you would really need to look when each type was acquired and where they are flown too. May not have been practical to get wide bodies when they first got the 737s, so when the time came, the best deal they got was for the 330's, hardly the first airline to do that. As for the CRJ and Q400, the capability of the airports they operate into may well be a determining factor when they were acquired. The Q400 would be a better fit for more austere airstrips, no doubt Rwanda has plenty of them, while the CRJ are a better fit for the regional, less popular routes that don't require the 737.

They do cover a lot of different capacities with the present fleet, while having the 4 different types may not be considered ideal, it should be flexible enough to be reasonably efficient. As for the no profits, the greater benefit to the economy will be the determining factor. Of course the airline would prefer to stand alone as a profit making enterprise, but as long as losses are digestible and the benefit to the overall economy is clear, they will continue to fly and bring tourists in to spend their cash.
 
evanb
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 2:38 pm

jupiter2 wrote:
They do cover a lot of different capacities with the present fleet, while having the 4 different types may not be considered ideal, it should be flexible enough to be reasonably efficient.


It's 4 fleet types, but only a total fleet of 13 aircraft (with 2 more on order). They're also 4 very different fleet times with very little cross commonality. The higher fixed costs of operating 4 types cannot be overcome when you have such a small fleet. As for TG, at least they're sharing those fixed costs over much larger sub-fleets.
 
jupiter2
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 4:58 pm

evanb wrote:
jupiter2 wrote:
They do cover a lot of different capacities with the present fleet, while having the 4 different types may not be considered ideal, it should be flexible enough to be reasonably efficient.


It's 4 fleet types, but only a total fleet of 13 aircraft (with 2 more on order). They're also 4 very different fleet times with very little cross commonality. The higher fixed costs of operating 4 types cannot be overcome when you have such a small fleet. As for TG, at least they're sharing those fixed costs over much larger sub-fleets.


Curious, what do you suggest the fleet should be for the routes they serve, also remembering the time frame the current fleet was acquired in ?
 
evanb
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 6:06 pm

jupiter2 wrote:
Curious, what do you suggest the fleet should be for the routes they serve, also remembering the time frame the current fleet was acquired in ?


Well, they want to be a jack of all trades and master of none. They want long haul (2x A330s), they want short/thin routes (2x CRJ-900), they want access to shorter runways (3x Dash 8) and also want a little more range and capacity (6x B737s). For 14 aircraft, they barely have enough size for 2 fleet types, never mind 4 fleet types. If they want a sustainable business model, I'd stick to 2 fleet types, one of the Dash or CRJ, and one of the A330 or B737 and generate sufficient scale (probably more than 20 aircraft before they add a third fleet type). But they'd have to give up some routes or ambitions to get there.

Also, I'm not sure what the time frame has to do with fleet acquisition.
 
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eastafspot
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 6:14 pm

jupiter2 wrote:
As for the current fleet, you would really need to look when each type was acquired and where they are flown too. May not have been practical to get wide bodies when they first got the 737s, so when the time came, the best deal they got was for the 330's, hardly the first airline to do that. As for the CRJ and Q400, the capability of the airports they operate into may well be a determining factor when they were acquired. The Q400 would be a better fit for more austere airstrips, no doubt Rwanda has plenty of them, while the CRJ are a better fit for the regional, less popular routes that don't require the 737.

There is only one domestic route for RwandAir (Rusizi/Kamembe) but a few years ago they used to fly to Rubavu (GYI). Both located at the border with DRCongo were renovated not long ago and runways are not in shacky condition.
Apparently WB opted for A330s instead of terrible teens 787 which is a good choice. Also if/when they get the 737max8 they will get rid of the CRJ900 (which are sometimes sent to Central African destinations).
Fly with Air Burundi, Air Tanzania, Golden Wings Aviation, Kenya Airways, RwandAir and Uganda Airlines...Jumuiya ya Afrika mashariki !
 
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eastafspot
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 6:20 pm

AF022 wrote:
PlymSpotter wrote:
Rwandair is partly being used by the government to expand Rwanda's Tourist industry and expand the countries profile. As such profitability is not necessarily the most important metric they are looking at.


Must be great to work for a company that isn't worried about profitability.

Must be the same as the ME3 10 years ago.
WB looks to be overstaffed, that's said some of the front office staff lack efficiency because it often takes several weeks to solve some basic issues...
Fly with Air Burundi, Air Tanzania, Golden Wings Aviation, Kenya Airways, RwandAir and Uganda Airlines...Jumuiya ya Afrika mashariki !
 
jupiter2
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Re: Rwandair growth and still no profits

Wed Feb 13, 2019 6:42 pm

evanb wrote:
jupiter2 wrote:
Curious, what do you suggest the fleet should be for the routes they serve, also remembering the time frame the current fleet was acquired in ?


Well, they want to be a jack of all trades and master of none. They want long haul (2x A330s), they want short/thin routes (2x CRJ-900), they want access to shorter runways (3x Dash 8) and also want a little more range and capacity (6x B737s). For 14 aircraft, they barely have enough size for 2 fleet types, never mind 4 fleet types. If they want a sustainable business model, I'd stick to 2 fleet types, one of the Dash or CRJ, and one of the A330 or B737 and generate sufficient scale (probably more than 20 aircraft before they add a third fleet type). But they'd have to give up some routes or ambitions to get there.

Also, I'm not sure what the time frame has to do with fleet acquisition.


Well time frame is relevant, as you just don't start a new airline with 4 different types. Most airlines will start with 1 or maybe 2 and expand from there, as has Rwandair.

So the aircraft they have cover short haul, low density (Q400), medium haul, low density (CRJ9) also remembering that the distances for medium haul in Africa, will probably be 2 hours plus in a jet, so not really viable for the Q400. Then we have medium haul higher density (737) and then their long haul routes to BRU and LGW and higher density medium haul (330). So not sure what you would get rid of. The 330 is too big for most of the regional routes, but good for Europe. The 737, good for regional routes, probably include Dubai and Mumbai (just), but useless for Europe, which would be the prime source of high value tourists, can't really afford to lose them. The Q400 and CRJ9, you could probably get by without the Q400, but the CRJ9 will be too much plane for some of the current routes.

All in all, I still see the fleet as balanced and meeting the needs of a young national carrier with a very specific focus, to bring tourists to Rwanda. Business travel and other leisure travel (VFR) is catered for as well, but the primary aim is to bring tourists in and the dollars they represent and that's what the fleet is based around.
 
AF022
Topic Author
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Re: Rwandair growth and still no profits

Fri Feb 15, 2019 8:32 am

evanb wrote:
Not profitable is an understatement! Here are the annual subsidies they're received from the Ministry of Finance:

2010 FRw 10.8 billion
2011 FRw 25.2 billion
2012 FRw 22.0 billion
2013 FRw 27.0 billion
2014 FRw 29.1 billion
2015 FRw 33.6 billion (The 2015 subsidy was 33% of turnover!)
2016 FRw 49.6 billion
2017 FRw 86.3 billion
2018 FRw 107.0 billion

That's a total of FRw 390.6 billion which is $656.6 million at current rates. Most of this is even before the big expansion with the arrival of the A330s in 2016! They're burning money pretty quickly!


This is a huge amount of money. Is there a source for this?
 
evanb
Posts: 618
Joined: Thu Jan 07, 2016 3:26 pm

Re: Rwandair growth and still no profits

Fri Feb 15, 2019 1:30 pm

AF022 wrote:
This is a huge amount of money. Is there a source for this?


Rwanda Ministry of Finance and Economic Planning release a Budget Framework Paper every year. See the following link for the most recent year's (2018): http://www.minecofin.gov.rw/fileadmin/t ... _Paper.pdf

In part IV.1.2.(c) you find the subsidy to Rwandair. You need to search through each year's Budget Framework Paper to get put together the full list.

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