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BusinessEthiopian to turn to Airbus as EXIM Bank halts operation

Ethiopian to turn to Airbus as EXIM Bank halts operation

Long-time customer of Boeing, Ethiopian Airlines, on Monday disclosed that it may opt to buy more Airbus aircraft if the US Export-Import Bank (EXIM Bank) halts its operation permanently.   

A large US business delegation led by Undersecretary of Commerce Gilbert Kaplan visited Ethiopia this week. The delegation comprising US government officials and executives of giant aviation and technology companies including General Electric (GE), Honeywell and Sabre on Monday visited the headquarters of Ethiopian Airlines.

The delegation was warmly received by the executive management of Ethiopian Airlines.  During his discussion with Kaplan the Ethiopian Airlines Group CEO Tewolde Gebremariam expressed his concern with the disruption of the US EXIM Bank financial services. Tewolde told Kaplan that his airline has been a reliable customer of Boeing for more than six decades. “We were the first airline in Africa to bring the B720. In the 1980s we were the first African airline to operate the B767 and the second in the world next to El Al of Israel. Again that pioneering continued in 2012 when we acquired the B787 Dreamliner aircraft only next to Japan,” Tewolde said. Boeing B787 jetliner is the core fleet of Ethiopian.

Tewolde explained that Ethiopian has been buying Boeing airplanes with the help of the US EXIM Bank. “It was the EXIM Bank that gives us guarantee. Now the Bank has ceased its operation. We are now facing challenge in buying Boeing airplanes,” he said.

The US EXIM Bank provides export finances to American businesses. The Bank gives loan guarantees for Ethiopian Airlines for the aircraft it buys from Boeing. The airline secures loans from reputable international banks such as HSBC, ING, Chase Bank and JP Morgan.

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Tewolde explained that EXIM Bank’s support to Ethiopian was instrumental in buying Boeing aircraft adding that his airline was pressing hard for the relaunch of EXIM Bank’s services. “The EXIM Bank support to us is very instrumental. Otherwise we will be compelled to buy more Airbus aircraft,” he said.

Kaplan told Tewolde that he appreciates Ethiopian strong partnership with the American flagship company, Boeing, as well as other US aviation and technology companies. Kaplan said he understands the challenge Ethiopian was facing with the closure of EXIM Bank. He explained that his government is trying to revamp EXIM Bank’s operation.  

The US Senate and Congress is resisting to extend the mandate of the EXIM Bank. On June 21 President Donald Trump nominated Kimberly Reed, former president of the International Food Information Council Foundation, to serve a four-year term as president of the Export-Import Bank.      

Ethiopian operates B787-8, B787-900, B777-200, B777-300, B737-700, B737-800, B767 and B757 aircraft. It has also placed an order for 30 B737MAX – a new mid-size jetliner. The airline has been operating Boeing aircraft for the last 60 years starting with the B720. It was the first carrier in Africa to join the jet age in the early 1960s by introducing the Boeing B720 aircraft.  

Boeing is the major supplier of Ethiopian Airlines but GE, UT, Rockwell Collins, BE Aerospace and Honeywell are also large suppliers of aircraft engines, avionics components, aircraft seats and inflight products.

Ethiopian Airlines has been a dedicated Boeing customer for the last 60 years until it for the first time acquired Airbus aircraft in 2016. Out of its current fleet of 100 airplanes, 70 are Boeing jet aircraft (24 B737, 22 B787, 16 B777, 6 B767 and 2 B757F) purchased at a list price of USD nine billion. Ethiopian also has 44 Boeing airplanes on order to be delivered in the next five years at a total value of six billion. According to Ethiopian Airlines, its import of planes, engines and components worth USD 21 billion has generated 115,000 jobs in the US.

Ethiopian is operating nine Airbus A350-900 aircraft and it has 16 more on order.    

During the US trade delegation’s visit, Ethiopian Airlines announced deals with GE and Honeywell and a training grant from the US Trade Development Agency (USTDA). USTDA is partnering with the Sabre Corporation to provide an Airline Solutions Training Program Technical Assistance grant for Ethiopian, which could leverage up to 21.2 million dollars in financing to support the procurement of airline information technology solutions, and consulting services. Ethiopian Airlines is procuring 12 GE engines valued at USD 444 million, as well as a separate USD 473.5 million 10-year maintenance contract. Ethiopian also signed two contracts with Honeywell – a USD 10.2 million deal for the Addis Ababa Bole International Airport expansion project and a USD 7.2 million Auxiliary Power Unit (APU) service contract.

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Video from Enat Bank Youtube Channel.


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