Ethiopian Airlines “raises the stakes” for African competitors

Ethiopian Airlines announced on August 9, 2018, it has registered record success in the 2017/2018 fiscal year that ended last month. The state-owned carrier has outpaced regional competitors to become Africa’s largest airline by revenue and profit, and is now buying shares in other carriers on the continent, the latest being a planned Nigerian national carrier.

According to the state-owned airline, during the 2017/2018 fiscal year, Ethiopian Air‘s operating revenue grew by 43% compared to previous fiscal year and reached $3.2 billion (89.1 billion Ethiopian birr (ETB)); the group‘s net profit rose to $245 million (6.8 billion ETB).

During the period Ethiopian introduced 14 new aircraft to its fleet, passing the 100th aircraft in service milestone, the first African airline to do so. In addition, the company states that the number of passengers carried grew by 21% topping the 10 million mark for the first time in the airline’s history with 10.6 million passengers.

Ethiopian also opened eight new international destinations in the reported period: Geneva (Switzerland), Chicago (U.S.), Bahrain, Kaduna (Nigeria), Buenos Aires (Argentina), Kisangani and Mbuji-Mayi (the DRC) and Nosy-Be (Madagascar).

Commenting on Ethiopian Airlines‘s results, Group CEO Tewolde GebreMariam called the fiscal year an “exceptional“ one for the flag carrier with “record performance in financial, operational, commercial and customer service areas“. He also thanked all of his 16,000 employees for being the „backbone“of the airline and the “architects“of its success.

But GebreMariam also made note of the challenges impacting the airline industry across Africa. According to him, jet fuel is on average 30% more expensive in Ethiopian‘s home market, Africa, than in the rest of the world, which puts the continent’s carriers at a “severe competitive disadvantage“. The other issue he points out is foreign carriers‘ „aggressive“ penetration into the African market.

No time wasted on growth

With an average growth rate of 25% in the past seven years, Ethiopian has been trying to position itself as an airline up to par with global carriers. To that end, it is currently implementing a 15-year strategic growth plan called „Vision 2025“.

However, the stragey has already been revised from the previous plan to more than double its fleet to 120 and become Africa’s biggest airline by 2025, as it already has 100 aircrat in its fleet. „We have expanded more than we planned,” GebreMariam told Reuters back in May 2018. “We had to revise the objective to make it 150 airplanes or more by 2025.”

And now that the Addis-Abbaba based airline has also outpaced regional competitors like Kenya Airways and South African Airways, it is also ready to take on bigger rivals, particularly the Gulf carriers, by buying stakes in other African carriers.

In January 2018, Ethiopian signed an agreement with Zambia’s government to relaunch that country’s national carrier. In May 2018, the Ethiopian‘s GebreMariam said the group was in talks with Chad, Djibouti, Equatorial Guinea and Guinea to set up carriers there through joint ventures. The chief executive also expressed intentions in creating a new airline in Mozambique, that his airline would fully own.

In more recent news, July 18, 2018, marked the first commercial flight between East African neighbors Ethiopia and Eritrea in 20 years, operated on Ethiopian Airlines. A day later, GebreMariam, who was onboard the historic flight, announced that his company is in talks to take a stake in Eritrean Airlines, but will have a study conducted to determine the size of the acquisition first, Reuters reported at the time.

An now, Ethiopian is the frontrunner to set up and manage a new national carrier for Nigeria, GebreMariam said on August 10, 2018. “We are among a small group with an interest in establishing a national carrier (in Nigeria)…we do not know the results (of the tender), though we are frontrunners,” he was quoted as saying in a news conference by Business Daily Africa.

According to the chief, Ethiopian already has MRO contracts with two Nigeria-based carriers, Arik Air and Medview Airline.

Source – AeroTime News Hub

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