Ethiopian Airlines’ strategy gives it a shot at survival
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If any African airline is having a reasonable pandemic, it is Ethiopian Airlines. Contrary to many of its regional and global counterparts, Ethiopian Airlines claims it has dealt with the crisis without reducing salaries or asking the government for a bailout (though reports in April suggested some staff have been furloughed without pay).
At a time when predicted global annual losses of $84.3bn have pushed industry giants such as American Airlines and Emirates to seek government support, this seems like nothing short of a miracle. In fact, it has more to do with leadership.
An employee of the airline for more than 35 years, CEO Tewolde Gebremariam says that Ethiopian Airlines’ earlier decision to switch to transporting cargo helped it avert financial ruin by allowing the airline to maintain half of its income while 90% of its passenger fleet is grounded.
“The decision to diversify as much as possible was the right decision because in times of crisis such as we are experiencing today, it has become a life-saving decision,” Tewolde told African Business.
The ability to pivot into the cargo business is possible thanks to the airline’s prolonged investment in the sector, which led to the creation of Africa’s largest and most advanced cargo hub in Addis Ababa.
The decision was taken in March to shift from “growth mode to survival mode”, said the CEO, leading to the reallocation of capital and resources away from its passenger business.
Building on its cargo fleet of 10 Boeing 777s and two Boeing 737s, Ethiopian Airlines also converted 25 passenger aircraft into cargo planes. “We have been loading cargo on passenger seats,” says Tewolde. “We have been using all means possible.”
Since the shift, Africa’s largest carrier has started shipping cargo to 70 destinations compared to just 10 at the start of the pandemic. Airfreight rates spiked during the crisis and have dropped off as capacity returns, but remain about 40%-50% above their usual levels. The International Air Transport Association (IATA) estimates cargo will contribute 26% of airline industry revenue in 2020, up from 12% in 2019.
The airline helped to deliver Covid-19 equipment throughout Africa and beyond in Europe, the US and South America. All three shipments of health-care equipment donated by Chinese billionaire Jack Ma passed through Addis Ababa and were distributed to 52 African countries.
Leveraging on its capacity to fly to 75 countries, it has also generated income ...
At a time when predicted global annual losses of $84.3bn have pushed industry giants such as American Airlines and Emirates to seek government support, this seems like nothing short of a miracle. In fact, it has more to do with leadership.
An employee of the airline for more than 35 years, CEO Tewolde Gebremariam says that Ethiopian Airlines’ earlier decision to switch to transporting cargo helped it avert financial ruin by allowing the airline to maintain half of its income while 90% of its passenger fleet is grounded.
“The decision to diversify as much as possible was the right decision because in times of crisis such as we are experiencing today, it has become a life-saving decision,” Tewolde told African Business.
The ability to pivot into the cargo business is possible thanks to the airline’s prolonged investment in the sector, which led to the creation of Africa’s largest and most advanced cargo hub in Addis Ababa.
The decision was taken in March to shift from “growth mode to survival mode”, said the CEO, leading to the reallocation of capital and resources away from its passenger business.
Building on its cargo fleet of 10 Boeing 777s and two Boeing 737s, Ethiopian Airlines also converted 25 passenger aircraft into cargo planes. “We have been loading cargo on passenger seats,” says Tewolde. “We have been using all means possible.”
Since the shift, Africa’s largest carrier has started shipping cargo to 70 destinations compared to just 10 at the start of the pandemic. Airfreight rates spiked during the crisis and have dropped off as capacity returns, but remain about 40%-50% above their usual levels. The International Air Transport Association (IATA) estimates cargo will contribute 26% of airline industry revenue in 2020, up from 12% in 2019.
The airline helped to deliver Covid-19 equipment throughout Africa and beyond in Europe, the US and South America. All three shipments of health-care equipment donated by Chinese billionaire Jack Ma passed through Addis Ababa and were distributed to 52 African countries.
Leveraging on its capacity to fly to 75 countries, it has also generated income ...
