Tuesday, May 21, 2024
BusinessCouncil of Ministers endorse Ethiopian, Airports Enterprise merger

Council of Ministers endorse Ethiopian, Airports Enterprise merger

  • No staff layoffs, minister says

The Council of Ministers passed a regulation that allows the merger of the national flag carrier, Ethiopian Airlines, and the Ethiopian Airports Enterprise, the sole government body that builds and administers airports in Ethiopia.

The merger proposal was initiated by Ethiopian and approved and presented to the Council of Ministers by the Ministry of Transport. The Council of Ministers passed the regulation on of Friday, July 14.  

Minister of Transport, Ahmed Shidie, on Sunday July 16 gave a briefing on the planned merger to employees of the Ethiopian Airports Enterprise (EAE). At the meeting held at the Enterprise’s assembly hall executive management members of Ethiopian and EAE participated.

Ahmed explained about the global highly competitive airline industry and how Ethiopian managed to grow fast in spite of all the challenges. The minister pointed out that airlines do not only compete with their services but also the quality of their airport hubs and airport services. He said the quality of airport services play a key role in winning the stiff competition. According to the minister, as Ethiopian Airlines is growing fast, its demand for better airport infrastructure and airport service is increasing proportionally. 


Ahmed said that the Ethiopian government recognizes the airport development work being undertaken by EAE. However, he said, to meet the growing demand of the national flag carrier the government has decided to introduce a new structure. “It is high time to take the airport service to a higher level. It is not to undermine what has been done by EAE. We appreciate the airport infrastructure development work undertaken by the enterprise. But we have to upgrade the airport service.”   

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Ahmed said that a parent company dubbed Ethiopian Group Corporation which will comprise Ethiopian Airlines and EAE will be established. Ethiopian and EAE will be led by the same board and they will have a common strategy. The board of directors of Ethiopian is chaired by speaker of the House of People’s Representatives, Abadula Gemeda, while the board of directors of Ethiopian Airports Enterprise is chaired by state minister of Water Irrigation and Electricity, Wondimu Tekle.  However, they will keep their autonomous brand and logo. According to Ahmed, the corporation will eventually transform into a holding company. He said the merger will be undertaken in two months’ time.

Ahmed opened the floor to questions. Employees of EAE raised their concern about staff layoff during the merger. They also asked what will be done to their severance pay. The employees said in a bid to improve airport services the contribution of partner organizations including Immigration, Customs and security is crucial. “What is going to be done to these partner organizations?” they asked. Some of the employees also said that the type of the merger was not clear.

Ahmed assured the employees of EAE that that there will be no staff layoffs. However, he said there could be reshuffling in the management. With regards to partner organizations the minister said that a study has already been conducted on the working relation with airport customs. Similar studies that would enable the ministry to determine the working relation with security and immigration will be undertaken.

CEO of EAE Tewodros Dawit said that the job security of the employees of the enterprise will not be affected right now and advised the employees to calm down and focus on their task. Dawit said that the details of the merger will be revealed in due course.    

Ethiopian Airlines Group CEO Tewolde Gebremariam on his part said that the existence of the airline as well as the EAE is in the hands of the management and employees of the companies. “Our existence lies in our hands. If we collaborate and work hard we could sustain our growth. But if we fail to cooperate and work hard we all shall perish,” Tewolde said.

He noted that the contribution of management for the failure of a company is 80 percent while employees contribute 20 percent. Tewolde called on all the employees to cooperate and work hard.

Wrapping up the meeting, Ahmed told employees to prepare themselves for change. He advised the management and employees of Ethiopian and EAE to work together.

Sources told The Reporter that the Ethiopian Group Corporation, the planned holding company, will have a third line of business that manages hotels. The corporation will incorporate the four-star hotel that Ethiopian Airlines is building in front of its headquarters. Sources said the corporation may also take over some state-owned hotels.      

Ethiopian Airlines, which launched a 15-year growth strategy dubbed Vision 2025 in 2010, grew fivefold in seven years’ time. In 2014, the national flag carrier managed to become the largest and most profitable airline in Africa overtaking the oldest and leading airlines South African Airways and Egypt Air. The airline operates a young and modern fleet of 86 aircraft and serves 95 international destinations on five continents. The airline is envisioned with becoming the largest aviation group consisting of seven business units – Ethiopian International, Domestic, Cargo, Maintenance and Engineering, Catering, Aviation Academy, and Ground Handling – by 2025. The airline has achieved most of its goals set in the Vision2025 well ahead of time.

In order to cope with the fast growth of Ethiopian, the Ethiopian Airports Enterprise has outlined a vision that would enable it to become the best airport service provider by 2025. The enterprise has been building new airports in the regional states and expanding the existing airports in Addis Ababa and other regions. Currently the enterprise is expanding the Addis Ababa Bole International Airport passenger terminal at a cost of 350 million dollars. It is also building six airports in Semera, Hawassa, Bale Robe, Shire, Dembi Dolo and Nekemte towns. Currently, the enterprise administers 23 airports – four international and 19 domestic.

By Kaleyesus Bekele

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