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
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.
By Robert Wall
The Wall Street Journal
Carrier also considered Airbus’s A350-1000 widebody but deemed Boeing plane better suited its operations
Ethiopian Airlines plans to place an order for Boeing Co. 777X long-range jetliners before the end of the year, the East African carrier’s chief executive said.
The airline could buy as many as 15 to 20 of Boeing’s newest airplanes after also considering the purchase of Airbus Group SE’s A350-1000 widebody, Tewolde Gebremariam said in an interview on Wednesday. The deal would have a value of $7.4 billion at list price, though buyers typically get discounts.
The Boeing plane was deemed more suited to operations from the airline’s high-altitude hub in Addis Ababa, Mr. Gebremariam said. Taking off at high altitudes and in hot weather can put a strain on aircraft performance.
The new planes, due for delivery after 2020, would replace 10 older 777 twin-engine planes and provide for growth, he said.
Boeing is developing two versions of its new long-haul plane, one that would seat around 400 passengers and a lower-capacity, ultra-long-range model dubbed the 777-8. Mr. Gebremariam said Ethiopian was opting for the lower-capacity plane that better suits Addis Ababa operations.
Ethiopian has been on a steady expansion path despite sometimes difficult market conditions. The carrier last year warned the Ebola outbreak in Africa had hit demand even though the affected regions were far from Ethiopia. In the end, the financial pain proved less dramatic, Mr. Gebremariam said, with the airline delivering a $175 million record profit at the end of its financial year in June.
This year the airline is grappling with the impact of low oil prices. Though the decline in fuel cost is a boon to the carrier by lowering operating costs, demand in African oil-exporting markets such as Nigeria and Angola has been hit, the airline chief executive said. What the impact on the full-year results may be is too early to determine, he said.
Even so, the carrier plans to introduce about 10 new aircraft this fiscal year, including the first two Airbus A350-900 widebodies next Spring. It also is adding a pair of 777 freighters and Dreamliners, he said.
Mr. Gebremariam this week told The Wall Street Journal the airline had to scramble to secure loans for a Boeing 787 plane delivery because it lacked a financing guarantee from the U.S. Export-Import Bank. Congressional Republicans effectively shut down the U.S. Ex-Im Bank by failing to reauthorize the agency at the end of June in a clash over spending priorities.
Mr. Gebremariam said the situation didn’t affect the carrier’s decision to buy the 777X from Boeing because delivery financing for those planes is still years away.
Ethiopian Airlines to start service to Madrid, Spain
Ethiopian Airlines, the largest airline in Africa, is pleased to announce that it has finalized preparations to start three weekly services to Madrid, Spain starting from September 2, 2014.
Ethiopian flights to Madrid will be operated through Rome and will bring the number of the airline’s international destinations across five continents to 83. The flights will provide the best connectivity options between Spain and East and Southern Africa.
Madrid, the political, economic and financial hub of Spain, is the country’s biggest and Europe’s the third largest city. It also houses the headquarters of the World Tourism Organization and numerous major corporations.
"We are very pleased to announce to our esteemed customers that Ethiopian will start services to Madrid, bringing the number of our European destinations to ten. The continued expansion of our network in Europe will enable our customers to enjoy wider choice of connectivity options when travelling between Europe and Africa. Spain is a major tourist originating and destination country. Our new route to Madrid will create opportunities for further strengthening the investment, trade, and tourism ties between Spain and 49 destinations in Africa with convenient and seamless connection through our main hub in Addis Ababa.", said Ethiopian Airlines Group Chief Executive Officer, Tewolde Gebremariam.
Passengers to and from Madrid will enjoy convenient connections to destinations in Ethiopian wide route network such as Zanzibar, Kilimanjaro, Dar es Salam, Nairobi, Entebbe, Lusaka, Luanda and Johannesburg.
Ethiopian is a global Pan-African carrier currently serving 82 international destinations across 5 continents with over 200 daily flights and using the latest technology aircraft such as the B777s and B787s.