RwandAir will inject $200 million in a five-year expansion plan that is aimed at making it profitable.

John Mirenge, the national carrier’s Chief Executive Officer, told The EastAfrican the airline has been gaining ground to break even after focusing on investment in special equipment and human resources.

He added: “We are working on a five-year business plan but our break-even comes towards the fourth year. It has been difficult for us to reach the break-even fast enough because we are continuously growing.

“Had we stopped in 2010, with two aircraft, probably by now we would have broken even.”

The government has been borrowing heavily to fund the national carrier, which is among its strategic investments, in its quest to make the country a regional conference hub by next year.

In the revised budget for 2013/2014, funds to RwandAir were increased from the initial Rwf22 billion ($32.3 million) to Rwf29 billion ($42.7 million), raising concern among Rwandan lawmakers that the government was spending too much on an airline that is yet to break even. The budget also went up by Rwf32.5 billion ($47.9 million) to repay loans for the airline.

READ: Rwandan MPs question funding mega projects

As part of its aggressive expansion, the airline has invested heavily in equipment and grown its fleet to seven aircraft. This month, it took delivery of its latest Bombardier Q400 NextGen aircraft, becoming the youngest airline with a complete fleet of Next Generation aircraft.

RwandAir has also introduced new destinations in West Africa, South Africa and Dubai in addition to increasing flight frequency on traditional destinations. It is expected to add new destinations, including Angola’s capital Launda and Cameroon’s capital Yaounde, in the next few months.

READ: RwandAir increases Jo’burg flights

Set ambitious target

The airline has set itself an ambitious target to increase its destinations to 25 next year from 16 by mainly focusing on the under-served African market. Its expansion plans are expected to be boosted when it receives two Boeing 787 Dreamliner planes in 2017.

“But this [expansion] comes at a high cost,” said Mr Mirenge. “We want to start to recover returns, a year or two down the road, this has been holding us from reaching the break-even point.”

RwandAir will also enhance the capacity of its local employees to reduce reliance on expatriates, the about 100 of whom increase its operational costs.

Early this year, RwandAir got its first local pilot, Captain Jean Paul Muvunyi, to fly a CRJ NextGen aircraft after Bosco Murabukirwa became its first local pilot to captain a Boeing 737 in December.

However, industry analysts see RwandAir as punching above its weight, arguing that acquiring the aircrafts may not be cost-effective for the country in the face of cut-throat competition from already established airlines in the region such as Ethiopian Airlines and Kenya Airways.

Compared with Embraer, Boeing aircraft are considered very costly, but Mr Mirenge argues that the airline’s long-term ambitions, coupled with recent rapid growth in passenger traffic, also informs its decision to purchase aircraft with bigger capacity. Last year RwandAir transported about 500,000 passengers, up from 366,000 in 2012.

READ: Passenger traffic to grow by 25pc this year, says Rwanda CAA

The government has put on hold plans to privatise RwandAir until it becomes profitable and hence attractive to investors.

“It is a heavy and long-term investment venture that the government has undertaken that is yielding [slowly but surely] both tangible and intangible benefits for the economy,” said Iza Irame, the CEO of African Alliance Rwanda.

With its cargo services, the airline will boost other sectors of the economy, including exporters ready to explore new markets, she added.

Rwanda is counting on the aggressive expansion of the national carrier to grow its tourism revenues as the airline launches new routes and direct flights in the coming months. This is because RwandAir is solving the major challenge of international visitors accessing Rwanda.