Airlines across the world are feeling the adverse effects of the coronavirus crisis and the current aviation downturn; from losing up to 98% of their business, missing entire high-traffic summer seasons, to bankruptcy. While the aviation world scrambles to control the damage, there is one airline whose recovery roadmap has solidified their position as one of the most robust airlines: Ethiopian Airlines.
The flagship carrier has a humble beginning from a single aircraft; founded by an Emperor at the tail end of World War Two in December 1945. The 1950s saw it reach beyond Ethiopia’s borders, and in the 1970s, the airline was the first in Africa to acquire jet aircraft like the Boeing 767. As of the 2020s, it has a world-spanning network of 125 destinations and is ranked among some of the best onboard experiences in the air. The carrier is the largest airline on the continent by the number of seats, with 52% more seats than the nearest competition (EgyptAir), 80% than third place Oneworld carrier Royal Air Maroc and double that of fallen titan South African Airways.
But unfortunately current events have forced the airline into a hibernation of sorts, until the aviation industry recovers globally. Here are some of the reasons why Ethiopian Airlines is best set to recover from the aviation crisis than other carriers on the continent.
Ethiopian Airlines is financially sound
If there is one phone call Ethiopian hasn’t made, its to the government asking for aid. Considering the financial situation of many airlines around the world, Ethiopian is thriving. Not only has the carrier not asked for aid, but it has also not been forced to lay off any workers, or cancel any routes. Plus, at the start of the crisis, Ethiopian was quick to reduce expenses in order to ‘hibernate’ large parts of its fleet and operations.
CEO Tewolde GebreMariam told The Africa Report in June 2020,
“I never said I would appeal to the state. To date, we don’t need them. We are working hard to manage the crisis with our own resources.”
This means that not only is the company financially sound, but it is allowing the government to look after firms in a far more dire position than itself. The carrier also struck a deal with the Chinese government to maintain critical routes to transport medical staff and equipment. While this deal was controversial at the peak of the coronavirus crisis, we can’t criticize their foresight that the battlefield would shift to other regions.
At the end of the financial year 2019-2020, the carrier recorded a profit. Which you will agree is a phenomenal task in this current time.
“We may not be as profitable as we expected, but we registered some profit,” Chief Executive Officer Tewolde Gebre-Mariam said in an interview to Bloomberg. “The first half of the year was good, and the cargo business has also done very well.”
Ethiopian has other markets
The airline has one other ace up its sleeve; it knows how to diversify its market. When the crisis hit hard, the management looked to see how they could redirect their resources to other opportunities.
“The strategy of diversifying our activities into cargo, maintenance, and hotels is proving to be the right one, as it is helping us to get through this period. We are taking full advantage of it.” continued the CEO to The Africa Report.
One such market was cargo. Unlike other carriers that deployed additional flights with passenger aircraft, Ethiopian dived headfirst into the market and converted twenty passenger aircraft into freighters. When prices shot up in the mail packet market, Ethiopian was there ready to help international commerce.
“As soon as the passenger transport business came to a halt, we were able to turn to cargo and maintenance. We doubled our cargo capacity; we converted 20 passenger aircraft for cargo in addition to the 10 Boeing 777s and two Boeing 737 Cargo aircraft that we had. We will continue to expand in this segment. This will allow us to generate cash until the passenger business resumes.”
They have a plan.
A famous T.E. Lawrence quote sums up Ethiopian Airlines well: “dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.” Ethiopian Airlines is not only in a great position to take advantage of the market when the coronavirus crisis resolves, but prior to the crisis, they have been working towards a long-term plan. This 15-year strategic plan is called Vision 2025 and outlines the next decade and a half for the carrier.
The carrier has consistently invested in new technology, such as the latest generation of aircraft. These aircraft, such as the Boeing 787 Dreamliner and Airbus A350-900, save the carrier millions in fuel, push the envelope for international network connectivity and expand on passenger comfort and customer experience.
Additionally, Ethiopian has significant investments in fellow African airlines. Until an open skies agreement can be finalized amongst the market place in Africa, the carrier has had to open new hubs using backdoors by purchasing shares in other airlines. While steps like this might be seen as corporate expansionism, the benefits to regional areas seeing Ethiopian invest millions are second to none.
With these factors in mind, Ethiopian Airlines is waiting for the right time to resume full operations and take advantage of the recovering market when flight activity returns to normal. If the carrier wasn’t already on your radar, it should undoubtedly be now. Watch this space.