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BusinessEthiopian Airlines remains profitable despite aviation hiccups

Ethiopian Airlines remains profitable despite aviation hiccups

It exceeded revenue target by 13 %

Ethiopian Airlines Group posted 118.2 billion birr in revenues for the first half of 2021/22 fiscal year, four billion birr more than its target set for the period. The revenue is almost equal to the operational revenue the Group generated during the whole year of 2020.

The airlines managed to maintain a high revenue trajectory, despite a difficult year for the aviation industry, due to the global pandemic and its variants.

The exceeded revenue gain was recorded in the first half of the fiscal year, which included the final months of 2021, which was surrounded by the Delta and Omicron COVID-19 variants, as well as in 2021, when African Airlines recorded USD 8.6 billion in revenue losses.

As global tourism and travel dwindled since March 2020, Ethiopian converted over 25 percent of its passenger aircrafts into cargo, embarking on vaccine delivery around the globe.

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However, over the past six months, passenger transportation is perfectly recovering. The airlines transported 4.06 million passengers in the first half of the fiscal year, accounting for 78 percent of the 5.2 million passengers targeted. This represents a 155 percent increase over the previous fiscal year.

Ethiopian Airlines also operates Africa’s largest cargo network, with 58 cargo destinations in Africa, the Gulf, Middle East, Asia, Europe, and North America. In addition to its ten dedicated freighters, the airline reconfigured its passenger aircraft for cargo services, as demand for passenger transportation decreased.

COVID-19 variants such as Delta and Omicron were detected in the first half of the fiscal year, which ended on January 8, 2022, causing countries to impose travel restrictions. The travel restrictions slowed international demand by about two weeks in December, according to data from the International Air Transport Association (IATA).

The airline also teamed up with UNICEF to transport vaccines and other life-saving supplies around the world. As of September 2021, Ethiopian Airlines Group had delivered 50 million doses of vaccine to over 28 countries worldwide.

The war in northern Ethiopia extended to Amhara and Afar regions, covering areas nearly 222 kilometers from Addis Ababa in the first half of the fiscal year. This halted flight’s to cities such as Kombolcha, Lalibela and Dessie for months. Flights to Tigray region have been and are still grounded for more than a year due to the war.

While reviewing the group’s six month performance at Hilton hotel on March 1, 2022, Ahmed Shide, Minister of Finance, praised the airline’s achievement.

“Good work in freight cargo, timely financial analysis, risk management and successor preparation, has been done,” said Ahmed.

Girma Wake, former CEO of Ethiopian Airlines, lauded the airline’s accomplishment, citing the bankruptcy reported by many airlines worldwide since the pandemic begun.

“Ethiopian airlines managed to show this kind of performance without any government subsidy, whereas airlines in neighboring Kenya are bailed out by the government,” Girma said to The Reporter. He lauded the Airline management’s flexibility to shift to cargo business to counteract the pandemic.

Ahmed Kello, another former CEO of Ethiopian Airlines, agreed with the effectiveness of the airline’s decision to focus on cargo services, adding, the airline’s readiness over the past years to improve its cargo service capacity has made the transition smoother.

“The diaspora homecoming initiative in the past Christmas holiday has helped the six-month performance of the airlines,” Ahmed told The Reporter.

Girma on his part suggested the airline to transition once again to passenger transport when the time comes.

“Once the pandemic is under control, the amount of revenue generated from cargo will be reduced,” Girma explained, adding “the airline must rearrange their reconfigured passenger aircraft to their previous status one by one, beginning now, because trying to rearrange them all at once will cost a lot.”

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