Since its humble beginnings in 1946 with a flight from Ethiopia’s capital Addis Ababa to Cairo in Egypt, Ethiopian Airlines has come a long way. Ethiopia’s flag carrier is now the largest aviation group in Africa and also the most profitable in the continent. Not only this: it flies to more places in Africa and around the world than any other airline!
The past fiscal year has been exceptionally impressive for the airline and officials announced a financial performance that saw a net profit of 233 million dollars while the operating revenue increased by 43% to a whopping 3.7 billion dollars.
“It was an exceptional year for Ethiopian with record performance in financial, operational, commercial and customer service areas,” Group CEO of Ethiopian Airlines, Tewolde Gebremariam, stated on August 10th, 2018, as the financial performance for the 2017/18 period was announced at the company’s headquarters in Addis Ababa. “This performance is all the more exceptional given the very tough operating and competitive environment in Africa, where jet fuel price, our main cost driver, has soared during the year and is on average 30% more expensive in Africa, our home market, than in the rest of the world, putting the continent’s carriers at a severe competitive disadvantage.”
According to Tewolde, this year’s result was also achieved against the backdrop of aggressive foreign carriers’ penetration into the African market with the African airline industry collectively forecasted to lose money.
Company documents provided to 7Dnews show the airline aims to further grow its network, introduce a record number of modern fleet and greatly enhance its on-ground customer service at its main hub during the 2018/19 fiscal year. “These will be achieved with the opening at the end of 2018 of a newly expanded and significantly upgraded airport terminal in Addis Ababa,” the document reads.
The number of passengers carried by Ethiopian Airline in the past year has now topped ten million and freight transported increased to more than 400,000 tons.
In July, the leading customer service rating organization SKYTRAX has given Ethiopian Airlines a 4 star rating for the first time in its history and also acclaimed it as ‘The Best Airline in Africa.’
Despite massive expansion plans at home, Ethiopian Airlines is now also setting its sight on other airlines in Africa.
The East African carrier has already opened its West African hub in Lomé, Togo with ASKY Airline, which it manages, as well as owning a 40% stake. It also runs a smaller hub in Lilongwe, Malawi.
“There’s a discussion about establishing another hub in the D.R.C,” CEO Tewolde said in a recent meeting in Addis Ababa. “These hubs will give us closer connections with customers and will enable us to expand connectivity in the continent.”
According to company officials, a number of African air operators are expressing interest in working with the Addis Ababa-based carrier due to the reputation it has earned as the most profitable aviation group in the continent. Uganda, Tanzania, Zambia, Zimbabwe, Mozambique and Botswana are listed as some of the other countries that are expressing interest and deals are expected to be made with at least two of them in the coming year.
Addressing rumours that Ethiopian Airlines, which is fully owned by the Ethiopian government, owes the state billions of dollars, a leading African aviation expert who has advised numerous African airlines said it is far from fact.
"The airline fully finances its operations from its own cash flow and in the case of large aircraft purchases, it borrows globally, like all other international airlines," Zemedeneh Nigatu, who advised a number of African airlines, told 7Dnews. "Ethiopian Airlines has an excellent reputation amongst global financiers and that's why it has been able to obtain billions of dollars of aircraft financing from several big American and European banks at very attractive rates."
Zemedeneh, who has also advised Ethiopian Airlines, stressed that the Ethiopian government does not provide any loans to the airline and therefore the airline has no loans outstanding to the government.
The CEO of Ethiopian Airlines agrees.
“We don’t get any money in terms of capital injection from the government,” he said. “On the other hand, our competitors can always sell shares in the market because they raise capital on the stock exchange.”