Monday 16, July 2018 by Bloomberg

Ethiopian Air shelves plane deals, maps out privatisation plan

 

Privatisation plans sanctioned by Ethiopia’s ruling politburo are more likely to see foreign involvement in various operating units than an outright stake sale, said Tewolde GebreMariam, CEO of Ethiopian Air.

  

Ethiopian Airlines Group has shelved plans to establish a fleet of smaller jetliners as gains in demand suggest that the routes where they’d be deployed would be better served using larger planes.

Africa’s biggest airline had been looking Airbus’s new A220 together with Embraer SA’s E195. An order, which had been mooted as likely at this week’s Farnborough air show, is now off the agenda, Tewolde said in an interview.

“We have decided to suspend the evaluation of the 100-seater regional aircraft acquisition project, since the market size of the selected regional routes is growing faster than we expected,” he said. Boeing 737 jets from the current fleet will instead be used while the airline studies passenger trends.

Tewolde also said there is no prospect of an order for the Airbus A350-1000 wide-body or Boeing’s rival 777X at the Farnborough expo, with Ethiopian still evaluating the two planes for its latest long-haul requirements. A purchase of more of the US company’s current-generation 777s or the 787 Dreamliner remains an alternative, he said.

Ethiopian Air already makes a significant economic contribution to the nation while being efficient, competitive internationally and able to raise capital for growth.

Of the group’s seven or eight business units, some will be “very attractive” to investors and could also benefit from outside involvement, he said. He cited the airline’s hotel business, airports, aerospace manufacturing where negotiations are underway with companies including Boeing, Airbus and Bombardier, and its logistics arm, where a venture with Deutsche Post AG’s DHL brand should be transformed into a joint holding giving the German company a 49 per cent stake “within weeks.”

It’s also possible that countries where Ethiopian is working on international offshoots could take reciprocal stakes in the Addis Ababa-based carrier, Tewolde said. The CEO said in May that his company would take holdings in new operators in Zambia, Chad, Mozambique and Guinea while helping to manage existing carriers in Equatorial Guinea and the Democratic Republic of Congo.

Ethiopian Air, which has turned Addis Ababa into Africa’s equivalent of the Persian Gulf hubs, linking almost 70 global cities with close to 60 across the continent, already owns stakes in Malawi Airlines in the south and Togo-based Asky Airlines in the west. The new initiatives are aimed at consolidating its lead over rivals Kenya Airways and state-owned South African Airways.

  

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