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BusinessEthiopian declares strong performance amid turbulent times

Ethiopian declares strong performance amid turbulent times

To inaugurate five star hotel

Ethiopian Airlines on Thursday disclosed that it was on the right track to achieve all the development targets set in the Vision 2025, a 15-year growth roadmap launched in 2011 in spite of the turbulent time the global airline industry is navigating through.

Briefing journalists at the Ethiopian Aviation Academy the executive management team of Ethiopian Airlines Group revealed that the airline is achieving most of the targets of Vision 2025 ahead of time. Ethiopian Airlines Group CEO said that the airline which is on its eight-year of implementing the Vision 2025 plan has already achieved most of the targets seven years ahead of schedule. The airline met its targets in terms of fleet size, international destinations and construction of facilities including an aviation academy, catering facility and maintenance hangars. “We are now revising the plan to scale up the growth strategy to Vision 2030,” Tewolde said.  

Ethiopian has transformed itself into an aviation group consisting of nine business profit centers –international airline, domestic and regional airline, Ethiopian Cargo, Ethiopian MRO, Aviation Academy, Ground Handling, Catering, Ethiopian Airports and Ethiopian Hotel and Tour Services. The airline is also incorporating an aerospace manufacturing industry. The airline will inaugurate a five-star hotel it built at a cost of 65 million dollars next month. The hotel will have 373 rooms, several restaurants and conference halls. The hotel, which hopes to attract many Chinese tourists, will have the largest Chinese restaurant in Africa and it will be managed by a Chinese hotel management company. Ethiopian has embarked on the construction of the second hotel which will have 637 rooms. When the second phase is completed the hotel will be a major international convention center contributing a significant role in promoting conference tourism in the country.        

As part of the Vision 2025 multiple hub strategy Ethiopian has invested in ASKY Airline in Lomé, Malawi Airline and signed agreements to establish new airlines in Mozambique, Zambia, Chad and Guinea. Tewolde denied the news report which claims that Ethiopian agreed to buy 40 percent stake on Eritrean Airlines. “We are operating twice daily flight to Asmara and we are planning to operate Asmara-Europe flights on behalf of Eritrean Airlines. We are holding discussions with Eritrean Airlines on technical cooperation. We will see of our cooperation could lead us to stake acquisition,” he said.      

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Tewolde said that Ethiopian Airlines is the most successful and profitable airline in Africa. “The airline has been growing at a rate of 20-30 percent in the past eight years. The industry average airline growth is 5-6 percent.”  Ethiopian made a record high net profit of 6.8 billion birr (USD 233 million) in the 2017-2018 fiscal year that ended June 2018. The airline transported 10.6 million passengers and 400, 339 ton of cargo generating 89.1 billion birr. According to Vision 2025, Ethiopian will be a ten billion dollar company by the year 2025. The airline plans to generate USD 4.5 billion operating revenue in the current fiscal year. Tewolde is confident that the airline will meet its financial targets by 2025.

According to the CEO, the airline has a strong balance sheet. Asked about the debt of the airline, Chief Financial Officer Meseret Bitew said that the airline’s total debt is 2.4 billion dollars. Meseret explained that the airline takes loans for the procurement of aircraft and building of facilities by issuing international bid.

Tewolde said that the airline conducts exhaustive studies before taking loans and evaluates the return on investment. “The airline is constantly audited by international auditing firms. Our lenders, too, send their experts to asses our balance sheet,” he said. According to the CEO, the debt to equity ratio is 1.6 percent. “Up to three percent is tolerable in the airline industry. We are managing our debt properly.”   

The executive management team responded to some allegations circulating on the social and mainstream media.

Tewolde said that Facebook is a good communication platform. However, he said some people hiding their identities have waged campaign against the airline and management. “We also know that some employees on whom we took disciplinary measures due to serious breach of working procedures appear on TV stations to defame the management.”

Tewolde said that the airline has “very strict” disciplinary rules. “Employees are forced to adhere to those rules. Particularly in the pilot and technicians training schools there are hard military styled disciplinary rules. Those who find it difficult to meet these rules complain.”

According to the CEO, the management always strive to enhance the productivity of the employees. “We compete with giant global airlines such as Emirates and Singapore Airlines. The employee productivity of Singapore Airlines is USD 675,000 while Ethiopian employee productivity stood at USD 375,000. When we strive to increase productivity we face resistance from some employees. Some of them who came from other offices may find it unbearable,” he said.             

Chief Operating Officer Mesfin Tassew said that technicians who have committed serious violations of working procedures appeared on TV to accuse the management. “We did not fire them but they were suspended. Somehow they left the company on their own will and blame the management for that,” Mefin said.

Mesay Shiferaw, vice president human resources, said that Ethiopian Airlines has hired 8,000 employees in the past seven years. Mesay said that the airline has employee grievance handling mechanism in which employees can file their complaints.        

Daniel Abebe, fleet planning director, said that Ethiopian has stringent procurement procedures. Daniel said that experts from flight operations, maintenance and engineering and customer service participate in aircraft selection. “We make a thorough evaluation to determine which aircraft is fit for our purpose. We do not easily make decisions. There is a rigorous evaluation procedure,” he said.

With regards to employee diversity, Tewolde said that the airline has become a global airline adding that it is recruiting and training Chinese and West African cabin crew. “Locally we are trying to reach out to all the regional states to diversify our workforce.” However, he said the airline does not compromise on competence and qualification.

Yohannes Hailemariam (Capt.), vice president flight operations, noted that safety has a paramount importance in the airline industry adding that there is no room for mistakes. “So we take maximum precaution in recruiting and training cadet pilots. Staring from myself all pilots take medical and flight simulator tests every six month. Sometimes those who fail the exam try to externalize the problem,” Yohannes said.

Tewolde said that the executive management team is running the airline for some time. “We want to pass the most successful airline to the next generation. This airline, which carries our national flag to all parts of the world, belongs to every Ethiopian. It is the country’s ambassador and a pride to all Ethiopians,” he concluded.

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Video from Enat Bank Youtube Channel.


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