VZCZCXRO8894
PP RUEHJO
DE RUEHLGB #0264/01 1011525
ZNR UUUUU ZZH
P 101525Z APR 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 5231
INFO RUEHJB/AMEMBASSY BUJUMBURA 0283
RUEHDR/AMEMBASSY DAR ES SALAAM 1097
RUEHKM/AMEMBASSY KAMPALA 1866
RUEHKI/AMEMBASSY KINSHASA 0418
RUEHLO/AMEMBASSY LONDON 0205
RUEHNR/AMEMBASSY NAIROBI 1184
RUEHFR/AMEMBASSY PARIS 0459
RUEHWD/AMEMBASSY WINDHOEK 0172
RUEHOS/AMCONSUL LAGOS 0084
RUEHJO/AMCONSUL JOHANNESBURG 0114
RUEHMT/AMCONSUL MONTREAL 0020
RUEHGV/USMISSION GENEVA 0289

UNCLAS SECTION 01 OF 02 KIGALI 000264 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EFIN EINV AMGT CASC RW
SUBJECT:  RWANDAIR REPLACES CEO - CANCELS FLIGHTS TO 
JOHANNESBURG, NAIROBI 
 
REF: KIGALI 00202 
 
¶1. (SBU) Summary.  Former CEO of Rwandair, Manzi Kayihura, 
was arrested March 28 on charges of abuse of office. Rwanda's 
national airline has been battered recently by safety 
concerns, poor customer service and financial woes (reftel). 
Incoming CEO and former Board Chairman Gerald Zirimwabagabo 
confirmed that the airline has been forced to cancel flights 
to Johannesburg and Nairobi, but asserted that it was 
continuing flights to Bujumbura, Entebbe and Kilimanjaro. 
The new CEO admitted that the long-hoped for privatization 
was unlikely to happen anytime soon because "Rawandair is too 
weak to be privatized."  Zirimwabagabo asserted the airline 
is now looking at rebuilding its business plan and 
restructuring operations.  End Summary 
 
¶2. (U) The March 28 arrest of former CEO Kayihura follows 
months of erratic service, mechanical failures and safety 
concerns on leased Boeing 737 aircraft that provided service 
to Johannesburg and Nairobi for Rwandair (reftel).  The local 
press reported that Kayihura was arrested on charges of 
"abuse of office."  Kayihura has since been released from 
police custody but reportedly continues to be under 
investigation pending formal charges.  New CEO Zirimwabagabo 
told Econoff that Rwandair's problems were due to 
mismanagement and admitted that the airline did not have a 
good business plan, suffered from poor customer service and 
lacked sufficient business to be profitable. 
 
¶3. (SBU) Zirimwabagabo confirmed that Rwandair has been in 
negotiation with Meridian Airlines and SN Brussels for 
privatization.  These negotiations are still ongoing, but the 
CEO was doubtful of the outcome.  The prospective buyers were 
supposed to have submitted bids in January, but as of now the 
parties are still tied up in due diligence and renegotiation 
of the sale conditions, he said.  Zirimwabagabo claimed that 
the sale of the airline was poorly packaged from the 
beginning and candidly stated "Rwandair is too weak to be 
privatized." 
 
¶4. (SBU) If the privatization fails, the airline's new 
management will attempt to rebuild the business model and 
restructure operations.  Zirimwabagabo admitted he does not 
have any aviation experience, so his first priority will be 
to hire an aviation expert to advise the airline.  The CEO 
noted Rwandair will continue to fly its CRJ aircraft to 
Entebbe, Bujumbura and Kilimanjaro and asserted these planes 
were reliable and the routes profitable.  However, the CRJ 
aircraft have limited range and cargo capacity making them 
impractical to use on the Nairobi and Johannesburg routes, he 
said.  In the interim, Rwandair is attempting to negotiate a 
joint route agreement with one of three regional carriers 
(Kenya Air, Jet Link and an airline based in Uganda) to cover 
the Kigali-Nairobi run.  Zirimwabagabo said he hoped to 
conclude these negotiations within two weeks. 
 
¶5. (SBU) Separately, the South African Ambassador told Charge 
on April 7 that he raised the cancellation of service to 
Johannesburg with South African Airways and asked SAA to 
consider reinstating once-a-week service to Johannesburg. 
SAA, however, did not appear to be interested.  The 
QSAA, however, did not appear to be interested.  The 
Ambassador noted there was a possibility that Namibia Air 
might consider starting a Windhoek-J,burg-Kigali run in the 
future, adding that SAA serviced Nambia Air,s planes in 
South Africa so he was confident that the planes were safe. 
With regard to Rwandair,s use of several South African-based 
charters, the Ambassador noted that two of the charter 
companies did not have good safety records and one 
(Nation-wide) had in fact been grounded. 
 
¶6. (SBU) Looking forward, Rwandair hopes to add cargo 
capacity and expand its routes.  Zirimwabagabo claimed that 
Rwandair is interested in looking at a "lease to purchase" of 
a used Boeing 737-300. This aircraft would provide Rwandair 
with the capacity to service Nairobi and Johannesburg without 
relying on the use of a wet lease aircraft and would also 
offer the opportunity to explore new routes such as to Dubai. 
 He also said that Rwandair will need to focus on better 
training of its customer service staff, establish stronger 
 
KIGALI 00000264  002 OF 002 
 
 
alliances with other regional airlines and market the airline 
more effectively to travel agencies and tour groups. 
 
¶7. (SBU) Comment: Rwandair appears to be confronting the 
serious safety, management and financial issues that have 
burdened the airline of late.  The airline has been hoping 
for a white knight to rescue it from its financial woes -- 
this does not now appear to be a viable option.  While 
management's recognition of the weaknesses confronting 
Rwandair is a step towards resolving them, it is too soon to 
say that the airline's problems are behind it.  Much will 
depend on the restructuring that airline management claims 
are in the works, and the willingness of the Rwandan 
Government to continue to fund an unprofitable business. 
Reaching out to other regional airlines to pick up routes may 
provide a short-term solution, but we anticipate that travel 
on Rwandair to Nairobi and Johannesburg will continue to be 
erratic at best. 
 
SIM