Qatar banks on RwandAir deal to expand in Africa
Saturday October 12 2019
Rwanda is in the process of selling shares in the national carrier RwandAir to Qatar Airways, in a deal that is expected to shake up the country’s aviation industry and beyond.
Aviation experts say the move by Qatar to buy shares in RwandAir could enable it to solidify its presence in the African market given its current woes with its Gulf neighbours.
Qatar was banned from flying over neighbouring Saudi Arabia, the United Arab Emirates, and Bahrain since mid-2017 due to a dispute between it and the Gulf states.
They were key markets for the airline and so buying a stake in RwandAir will support its expansion into Africa as an alternative market.
Although the details are scanty, sources say the deal is at an advanced stage, with institutions from both carriers fast-tracking all the necessary processes to conclude it.
The EastAfrican reached out to RwandAir chief executive Yvonne Makolo for information on the deal such as the general terms; how many shares are being sold; when its likely to be finalised and what the national carrier stands to gain, but she neither denied nor confirmed.
“I have nothing to say about Qatar, I have no comment,” Ms Makolo said.
Although it is still making losses, RwandAir has been expanding over the past decade, due to financial injections from the government, many of which are from external loans like the Eurobond.
Aviation sources who spoke to The EastAfrican said that both RwandAir and Qatar are upbeat about the deal, which should be a win-win situation for both parties.
For instance, RwandAir is looking forward to Qatar handling maintenance and other technical aspects of its operations, which have been weighing down the carrier.
“At this stage of its growth RwandAir needs a partner with the technical resources and experience that Qatar Airways has,” the source said.
President Paul Kagame has in the past said that the country was open to privatising RwandAir at the right time and if it made business sense.
With the carrier’s current expansion plans and the key role it is expected to play in the country's growth trajectory, it was just a matter of time before it sought a strategic partner.
In April, the Emir of Qatar Sheikh Tamim bin Hamad Al Thani was in Kigali on a three-day state visit and the two leaders held bilateral talks.
They also signed an agreement to bolster aviation investments and co-operation, with Qatar promising to become a major investor in Rwanda’s new Bugesera Airport.
The governments also signed an air service agreement; agreement on the Reciprocal Promotion and Protection of Investments; and a memorandum of understanding on economic, commercial, and technical co-operation.
These talks likely paved the way for talks to sell RwandAir shares to Qatar Airways.
Earlier in February, the Rwandan parliament approved a bilateral investment treaty between Rwanda and Qatar, which was signed in 2018, paving the way for future investment co-operation between the two countries.
In an aviation summit held in Kigali early this year, Qatar chief executive Akbar Al Baker said he was looking to expand the airline’s footprint in Africa.
RwandAir recently added Guangzhou, Tel Aviv and Kinshasa routes as it seeks to take advantage of the aviation opportunities created by the growth of the trade, MICE and tourism sectors.
Meanwhile, Ethiopian Airlines has also been angling for shares in RwandAir for a long time, but nothing definitive came out, and it is still not clear if there are also parallel negotiations going on between Ethiopian Airlines and RwandAir.