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Ethiopian Airline's 2025 vision firmly in place on 70th anniversary
Source: Africa News Agency
ADDIS ABABA – It has survived a revolution, famines, political instability and the partition of a country. Today it is a thriving institution that employs thousands and generated US$ 1.7 billion in 2015.
Ethiopian Airlines (ET), the national air carrier of Africa’s second most populous nation, is celebrating its 70th anniversary starting this month, showcasing its history, its current achievements and future vision with a series of exhibitions and guided tours of its facilities.
The airline, established as a joint venture between the Ethiopian government and the US airline company Trans World Airlines (TWA), made its first commercial flight on April 8, 1946, with a US Airforce surplus Douglas C-47 Skytrain flying from Addis Ababa to Cairo, Egypt.
Staffed mainly by foreigners at the beginning, ET has steadily increased local employment. In 1957 the first solo flight by an Ethiopian aircraft commander was made. The same year it flew its first European route, to Frankfurt, Germany. And in 1960 it flew the great late marathon runner Abebe Bikila back to Ethiopia following his barefoot victory in the Rome Olympic Games.
Ethiopian Airlines has passed other milestones, including transporting many African leaders to Addis Ababa for the launch in May 1963 of the Organization of African Union (OAU), later to become the African Union (AU).
In February 1973, the airline flew its first East Asian route, to Shanghai in China, a closed communist country at that time.
In June 1998, it made its first flight to North America, to Washington DC, which houses the largest Ethiopian community outside of Ethiopia, while in July 2013, Ethiopian Airlines flew for the first time to Sao Paulo, Brazil, its first destination in South America, which many African air carriers have not ventured to.
It also has daily flights to Johannesburg which started in June 1993, almost a year before South Africa’s first fully democratic elections and also now flies direct to Durban and Cape Town.
South Africa has a large Ethiopian community, both legal and illegal, roughly estimated at tens of thousands, while trade and investment between the two countries is also growing.
While ET over the years has expanded its service to reach to 93 international and 19 domestic destinations, it has also expanded its fleet. Claiming it provided the first jet service on the continent in 1962, it has managed to keep apace in the cutthroat world of aviation, while many other carriers, especially African, have struggled or ceased to exist.
Its website claims it is the most profitable airline in Africa and that last year its profits exceeded those of all other African airlines combined.
READ: Ethiopian Airlines - Dreamliner shows profit
Tewolde Gebremariam, CEO of ET, however, said the aircarrier wasn’t content with its current status and in 2010 launched a 15-year plan called “Vision 2025” which included expanding its destinations and its fleet. It has exceeded key milestones towards its targets.
“We used to be primarily a cargo and passenger aircarrier, but with the world economy in flux and periodic outbreak of diseases like Ebola creating problems, we looked into other sectors,” he said, adding that it had strengthened its Maintenance and Repair Operations (MROs), and had created an aviation academy and a catering services company.
ET says it is training students from other African countries, especially through its aviation academy and MRO division, saving those airlines much needed cash from not having to train their personnel in Europe.
Its MRO division has also largely been able to maintain its aircraft fleet, saving it much needed finances.
The airline has just spent another US$120 million on expanding its motor maintenance services, has built three new MRO hangars, spent US$100 million for ground operation services like pilot and flight hostess training and expanded its catering services at a cost of US$2.5 million to increase its daily food production from 23,000 inflight meals daily to 80,000.
ET expects the catering expansion to be finished in two months time.
All these extra facilities are being built on its premises at Addis Ababa Bole International Airport.
The Vision 2025 plan aims to make Ethiopian Airlines the leading airline group in Africa in seven strategic business areas: international passenger service, regional service, cargo, MRO, aviation academy, inflight catering service and ground service.
While Ethiopian Airlines will probably continue to bag awards for its customer care and its expanding list of destinations, Gebremariam hinted that its biggest asset was its contribution to the Ethiopian government’s export drive.
With Ethiopia planning to dramatically increase its export of perishable items like flowers, fruits and meats, a new cargo terminal is being built at a total cost of US$650 million to increase annual cargo holding capacity by 600,000 tons to 1.2 million tons.
Gebremariam said the airline could not only can help meet the country’s development goals, but indirectly boost employment and tourism potential.
But he recently told visiting Ethiopian parliamentarians that the airline could only do so much, pointing out how far Ethiopia still had to go in developing its roads, water, electricity and telecoms.
He said Ethiopian Airlines was also be keen to further its interests in other airlines, with stakes already in West Africa-based aircarrier ASKY airlines, Air Malawi and Air Rwanda.
- Africa News Agency
Source: Financial Times
By John Aglionby
As big African airlines are grounded in heavy losses, Ethiopian Airlines continues to spread its wings.
An aggressive expansion strategy has helped the state-owned carrier transform itself from a competent regional player to the continent’s leading carrier in just five years
In a region where most airlines are struggling to break even as they grapple with the collapse in commodities and political instability, Ethiopian Airlines recorded a full-year profit of more than all other African carriers combined, according to data from the International Air Transport Association.
Its performance has meant it has already met most of its goals for its 15-year master plan to 2025 in the first five years.
“The growth rate in the industry is very low — the average could be less than 5 per cent — but we have been growing 20-25 per cent annually compound, in revenue and fleet [size],” said Tewolde Gebremariam, its chief executive.
In the year to June 2015, the company recorded a net profit of 3.15bn birr ($148m), compared with 2bn birr in the same period a year earlier. Based on accounts audited by the Audit Services Corporation, which inspects state-owned enterprises, its operating profit margin was 9.49 per cent, up from 2.14 per cent in 2011 and at a level comparable with the best European carriers. It has also increased its routes to 89, up from 69 in 2011.
Analysts attribute much of this success to the carrier’s benevolent owner, which does not demand dividends and, through state policies, can help keep down labour and financing costs.
The collapsing oil price has slashed fuel costs and the company has also benefited from turmoil blighting its main rivals. Kenya Airways, for instance, launched a big restructuring programme last year, including selling off several of its larger aircraft, which followed the failure of an ambitious expansion plan launched in 2011.
Kenya Airways, which is 26.7 per cent owned by Air France-KLM, has reported losses for the past three years, including $252m in the year to March 2015, the largest in Kenyan corporate history. It has blamed rising competition, terrorist attacks in Kenya and hedging losses for its woes.
Read More from Financial Times
Low wages draw international textile companies to Ethiopia
Low wages, cheap power and a stable political situation have prompted foreign textile companies like H&M to start sourcing from Ethiopia. The country has a huge workforce and would like to become the next international textile hub. But the workers themselves are struggling to make ends meet.
Sewing machines rattle away in the huge GG Super Garment factory in Debre Zeyit, some 45 kilometers (28 miles) southeast of the Ethiopian capital, Addis Ababa. Hundreds of women and a few men are sewing singlets and T-shirts, destined for the Swedish company H&M.
As a result of rising salaries and growing labor unrest in Asia, an increasing number of foreign companies have started moving their production to Ethiopia. According to factory manager Joseph Elisso, the conditions in the East African country are far more favorable.
"Ethiopia is stable and peaceful, electrical power is cheap and labor costs are very low," he explains.
Entry-level salaries for workers in Ethiopia's textile industry range from $35 to $40 (32 to 37 euros) per month - lower than Bangladesh's minimum wage of $68 per month and far below the average wage of $500 in the Chinese textile sector. Ethiopia doesn't have a minimum wage, and due to high unemployment, workers are often forced to accept whatever wage they are offered.
Not enough to live on
Although Ethiopian workers are generally happy that increasing foreign investment is bringing jobs, many are battling to make ends meet. "I only get 850 Ethiopian birr (about 38 euro) per month and struggle to cover all my expenses," Tigist Teshome says. The 23-year-old factory worker, dressed in a checkered pinafore, is living with friends to share the costs. "I would like to live on my own, but rent alone is already 600 birr. How will I manage to pay food and clothing?" she asks.
In Duken, about a half hour drive from the Debre Zeyit garment plant, there's a big shoe factory run by Chinese company Huajian. Around 3,800 Ethiopian men and women are busy hammering soles on shoes, sewing pieces of leather together, operating machines and checking the final products.
"Former Ethiopian Prime Minister Meles Zenawi invited us to set up a factory in Ethiopia because the employment rate is very low so they need labor intensive industry," Song Yiping, a manager with Huajian, says.
The company plans to produce 2 million pairs of shoes this year, mostly for American and European customers like Guess, Naturalizer and Toms. Ethiopia has one of the largest heads of cattle in Africa and leather is widely available in the country. The company is planning to expand production, boosting the number of workers to 50,000 in 10 years.
Although Huajian has created many news jobs, the company's employees complain their wages are too low . "My basic salary is just 600 birr (26 euros) and only when I work 10 instead of eight hours a day I get 750 birr (32 euros) a month, which still isn't enough. My rent alone is already 400 birr," says 24-year-old leather cutter Abu Ibrahim. "Also, our Chinese bosses shout at us in Chinese all the time and sometimes we aren't even allowed to go to the toilet," he adds.
Manager Song, however, says the low pay reflects the low productivity and quality of work. "The workers' lack of skill has impacted quality. Many shoes were rejected by our customers and we had to pay 4.5 million euros as compensation in the first two years," Song states.
Military drills for more discipline
The Huajian company, which was founded in China in the 1980s by former military officer Zhang Huarong, has also adopted a rather unusual method to motivate its staff. Every day, all the workers have to line up in the parking lot in front of the factory to perform a military drill, including marching, shouting, saluting and singing. "In the military they do marching to become disciplined and obey orders. We want to create the same effect," says human resources manager Zeng Lizhuo.
Not all workers appreciate this activity, though. "I have to walk long distances to fetch water at home, so I don't like to do even more physical exercise at work," 25-year-old worker Abebeye Makonen, dressed in a red T-shirt and skirt, says. She also hates the "Huajian song" that the workers are obliged to sing in Mandarin during the daily drill.
According to Zeng, the song is to unite the workers. "They sing that they make Huajian better and better to move forward and forward," he says.
Workers too scared to start a union
Although Ethiopia's constitution guarantees workers the right to associate, most factories, including Huajian, do not have trade unions. At Huajian, workers who tried to start a union were fired, according to Abu Ibrahim. "There were a couple of employees who tried to start a labor union, but when they were collecting money for this, Huajian dismissed them. Now everybody is too scared to start a union," the leather cutter says.
The way workers are treated at the Huajian factory is not unusual. About 75 percent of all Ethiopian companies still refuse to permit trade unions, says Angesom Yohannes from the Industrial Federation of Ethiopian Textile Trade Unions. "Most owners, especially the Chinese, don't want a trade union because they know that the next step will be collective bargaining, and certain benefits will be taken away from the owner or the factory," Yohannes adds.
He and his colleagues from the union nevertheless negotiate with individual factories in an attempt to secure better wages for the workers. After negotiating for three years, the union achieved a 25-percent wage increase in a collective bargaining agreement with the Turkish factory Ayka, which employs 7,000 Ethiopians. "We achieved this salary increase following pressure from Ayka's German client Tchibo," Yohannes says.
Ethiopian workers in a textile Company Picture: Jeroen van Loon
Workers say the entry-level salary of less than $40 (37 euros) per month are not enough to cover basic living costs
More pressure from outside
However, the union only has five full-time staff members and lacks the manpower and political weight to lobby for all factories. But Yohannes says pressure from customers abroad, like in the case of Tchibo, can have a big impact on strengthening workers' rights. He hopes H&M will also put pressure on GG Super Garment to raise salaries.
Dereje Feyissa Dori, research professor at the International Law and Policy Institute in Addis Ababa, believes that Ethiopia won't become a second Bangladesh, with dangerous working conditions. Factories aren't housed in shacky flats like in Asia, but in large production halls. Dori believes that Ethiopia's relaxed attitude towards foreign investors regarding labor rights won't last. "The government is so desperate to attract foreign investment. It doesn't want to scare or chase investors away by putting too many conditions, but it will become more strict in a couple of years," Dori says.
Ethiopian factory workers aren't optimistic about the future, according to Ibrahim. He says working conditions at Huajian are becoming worse. "In the beginning they allowed us two breaks per day, but now only one, while we have to work 10 hours a day," the leather cutter says, adding that he's not holding out for the government to take action. "Politicians don't help us either. Because they are happy with all the investments, they will always choose to side with the foreign companies."
Ethiopia Sees Nationwide Power Cuts While Drought Dries Dams
By William Davison : Bloomberg
Ethiopia may face further power shortages because of low water levels at dams after a poor rainy season, an official said, following two days of sporadic cuts caused by technical faults at hydropower plants.
Unspecified issues at a substation serving Oromia region’s Gibe 1 and 2 plants, which together can produce as much as 604 megawatts, and a shutdown at the 320-megawatt Tana Beles installation in Amhara state, caused the outages on Nov. 28-29, Ministry of Water, Irrigation and Energy spokesman Bezuneh Tolcha said Monday by phone.
The drought affecting the east of the country that’s left 8.2 million Ethiopians in need of food aid wasn’t related to the outages, though that may change in the coming months unless there’s non-seasonal rainfall, he said.
“There has been a shortage of rain all over country,” he said from the capital, Addis Ababa. “The dams have not collected as much water as they can collect.”
Growth in Ethiopia, Africa’s second-most populous nation and largest coffee producer, was 8.7 percent last year and may be 8.1 percent this fiscal year, according to the International Monetary Fund. The drought threatens to crimp economic expansion in a country where 39 percent of output stems from agriculture, about 90 percent of which relies on rain.
The 300-megawatt capacity Tekeze Hydropower Project in the drought-affected Tigray region is producing only 10 megawatts, Prime Minister Hailemariam Desalegn was cited as saying in an interview with The Reporter, an Addis Ababa-based newspaper, published on Nov. 28.
Two months after the end of the main rainy season, there are severe water shortages at the country’s oldest dam at Koka on the Awash River, which can generate 42 megawatts, and the 153-megawatt Melka Wakena on the Wabe Shabelle in east Oromia, Hailemariam said.
Over 94 percent of Ethiopia’s electricity was generated by hydropower in the last quarter of the fiscal year that ended July 7, and production increased 3.5 percent to 2,300 gigawatt hours compared with the year before, according to central bank data. The first two turbines from the 1,870-megawatt Gibe III plant have started producing power, Bezuneh said, without giving details.
The construction of Africa’s largest power station, the 6,000-megawatt Grand Ethiopian Renaissance Dam, is scheduled for completion in mid-2017 and it may annually produce as much as 15,860 gigawatt-hours of electricity
By Mary Harper Africa editor, BBC World Service News, Addis Ababa
"We decided to open the railway early because of the drought, the worst in decades," says Getachew Betru, chief executive of the Ethiopian Railways Corporation (ERC).
It is a Saturday, but this thoughtful, intelligent man is busy working. Except for the guards at the gate, nobody else is at the office.
Across the road, a white and green train whisks up to a station platform. It is part of Addis Ababa's newly opened light rail (or tram) system, the first in sub-Saharan Africa.
Mr Getachew shows me diagrams of a vast planned railway network, snaking its way across landlocked Ethiopia, linking Africa's second most populous country to Djibouti, Sudan, South Sudan and Kenya.
The railway is his baby. Like many Ethiopians, he left the country during the harsh years of dictatorship, but returned with a doctorate in engineering and a vision.
It all started when he took a trip with his family.
"We were driving through the countryside when we came across a railway track. Like so many boys, my sons loved trains and insisted we wait for one. It never came. I asked somebody when it might arrive. He told me it had been 10 years since the last train. I decided to try to do something about it. Now they call me Ethiopia's Brunel, after the famous British civil engineer."
The dream is that one day, the railway will extend from the Red Sea in Djibouti all the way across Africa to the Atlantic Ocean. A few wars will have to end first.
Due to the urgent need to feed the 8.2 million people Ethiopia says are suffering from the drought, the Addis Ababa-Djibouti line opened ahead of schedule on 20 November.
The first train to travel along the nearly 800km track delivered more than 3,000 tonnes of grain from Djibouti port to drought-affected areas. The United Nations says more than 15 million people will be in need of emergency food aid by the beginning of 2016.
The ERC says the railway will completely transform the way humanitarian assistance is delivered, in a country regularly affected by drought. "The trains will deliver bulk quantities of food aid very close to drought-affected people. It will do this in a matter of a few hours," says ERC technical adviser, Muluken Mesfin.
"One thousand five hundred trucks a day leave Djibouti port for Ethiopia," says the chairman of the Djibouti Port Authority, Abubaker Hadi. "It is projected there will be 8,000 a day by 2020. This is not feasible. That is why the railway is so desperately needed."
Mr Getachew agrees: "It can take trucks two to three weeks to reach Addis from Djibouti. They break down all the time and the road gets congested. Once it is fully operational the railway will cut the journey to about five hours, as the trains will travel at 120 km/h. This will save money as well as time."
The Chinese-built track runs parallel to the abandoned Ethio-Djibouti railway, built more than 100 years ago by France for Emperor Menelik. Costing some $3bn (£2bn), it starts at sea level in Djibouti. It then makes its way through Ethiopia's dramatic, challenging terrain until it reaches Addis Ababa, about 2,500m above sea level.
Mr Getachew expresses bewilderment at the World Bank and Western donors such as the European Union, who, he says, were reluctant to fund the railway project. "I think the road lobby was too strong. We ended up with the Chinese, who are not only constructing the railway, but providing most of the funding too."
Potential for peace
The economic potential of Ethiopia's planned 5,000km rail network is obvious. But the railway might do a whole lot more, both in terms of regional integration and maybe even peacemaking.
Railways are being constructed all over Africa. The East African Railway Master Plan hopes to revive existing lines in Kenya, Uganda and Tanzania, eventually extending them to Rwanda, Burundi, South Sudan and Ethiopia.
Mr Getachew hints at another potential role. He shows me how the Addis-Djibouti line lies close to Ethiopia's border with Somaliland, which declared independence in 1991 but has not been recognised internationally.
There has long been talk of linking Ethiopia with Somaliland's underused and underdeveloped Berbera port, which is 854km by road from Addis Ababa.
Ethiopia would then have an alternative to Djibouti, which is one of the world's most expensive ports and is becoming ever-more congested due to the increased demands of Africa's fast-growing economies.
A railway could also bring wealth to Somalis, suggests Mr Getachew. Somalia has the longest coastline in Africa, and has rich fish stocks. But Somalis are not keen on eating fish.
"Ethiopians have two fasting days a week when we only eat fish. As a landlocked country, we only have Nile perch and tilapia. As our economy grows, at about 10% a year, demand increases for more variety. This could be a win-win situation."
Constructing a rail link to Berbera would be a major challenge. This is mainly because Somaliland's ambiguous status means it would be difficult to secure vital international funding. But the territory is relatively stable, and, unlike in conflict-ridden southern and central Somalia, a railway line is unlikely to face threats of sabotage.
Somalia has several ports, and the potential for many more. It is possible to envisage rail lines linking Ethiopia and the Somali interior with ports all the way down the country, from Zeila in the north-east to Kismayo in the south.
This prospect for economic growth might serve as an incentive for the weak, sometimes directionless Somali government, and indeed foreign donors who have poured billions into the country since it fell apart nearly 30 years ago, often to little effect.
Perhaps the idea of a railway would spur on Somalis and their allies to drive out violent groups, including the al-Qaeda linked movement al-Shabab, which controls much of the country.
As one Ethiopian rail enthusiast put it: "Maybe Mr Getachew will be remembered not only as Ethiopia's Brunel but as a peacemaker for the entire region."
Tracking China's rail investments in Africa
In April, China Railway Construction Corp signed a $3.5bn (£2.3bn) contract to build an intercity rail line in Nigeria.
That followed a $12bn contract for another Nigerian rail line last year, which at the time was the biggest foreign contract won by a Chinese state-owned firm. The line is planned to run 1,400km along the Nigerian coast.
China is also building major rail projects in Angola (under an infrastructure-for-oil deal), DR Congo, Kenya and Tanzania.
Chinese infrastructure investments overseas are commonly underpinned by finance from Beijing-backed lenders such as China Development Bank. The rail projects are expected to generate billions of dollars in export orders for Chinese trainmakers.
Big Chinese investments in Africa have been controversial for several reasons, including use of imported Chinese labour, alleged poor treatment of workers and lack of transparency at the state-owned companies involved.
Many African countries have a compelling need for new or upgraded rail links, to boost trade, investment and development, but they have lacked finance.
Much of the existing network was built by mining companies in the colonial era to link industrial sites to ports. Passenger services account for less than 20% of African rail traffic, according to the African Development Bank.