Even by its own standards, Ethiopian Airlines’ recent growth has
been fast — so fast that it revised the ambitious 15-year strategy set
in 2010 and plans to buy more planes to step up its expansion.
Its
plan had been to more than double its fleet to 120 and become Africa’s
biggest airline by 2025, but it already has 100 planes flying to dozens
of destinations from Asia to South America, including four US cities.
The
State-owned carrier has also outpaced regional competitors Kenya
Airways and South African Airways to become Africa’s largest airline by
revenue and profit, according to the International Air Transport
Association.
“We have expanded more than we planned,” said Chief Executive Tewolde Gebremariam.
“We had to revise the objective to make it 150 airplanes or more by 2025.”
It now plans to place orders this year for 13 additional Boeing 787 jets and six more Airbus A350s, he told Reuters.
The
airline has come a long way from when it was established in 1945 as a
joint venture with now-defunct U.S. carrier Trans World Airlines (TWA).
In
its 2016/17 financial year Ethiopian Airlines generated $2.7 billion in
revenue, Tewolde said, up more than 11 percent from the previous year.
Passenger numbers climbed by more than 18 percent to 9 million while net
profit was $233 million, up from a little more than $220 million.
Deal-hungry
In 2013 Ethiopian Airlines acquired a minority stake in Malawi Airlines to serve as a base for its southern Africa operations.
That
kicked off a series of deals including January’s agreement with
Zambia’s government to relaunch that country’s national carrier, shut
down more than two decades ago.
The strategy is aimed at gaining a “competitive advantage” against rivals such as those in the Gulf, Tewolde said.
With
Africa’s aviation industry still hampered by government protectionism
and high taxes, Tewolde said that setting up or taking stakes in small
carriers is a way around the restrictions.
Ethiopian
Airlines aims to create a new airline in Mozambique that it will fully
own, he said, adding that it is also in talks with Chad, Djibouti,
Equatorial Guinea and Guinea to set up carriers through joint ventures.
“Going forward, it will be difficult for us to compete with only one hub in Addis Ababa.”
But it isn’t all clear skies for the fast-growing carrier.
The
economic downturn in Africa caused by the collapse of oil prices in
2014 has indirectly hit the continent’s airlines, and Ethiopian is
unable to repatriate more than $145 million in profits from Angola,
Sudan and Zimbabwe because of foreign exchange shortages, Tewolde said.
“Running a business needs cash flow,” he said. “Here in Africa, we have a huge problem with this.”
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