Ethiopian Airlines has reported a stout performance during the 2018-2019 fiscal year which the management described it as the most challenging year.
Presenting the annual performance report in a recorded video to employees, Ethiopian Airlines Group CEO Tewolde Gebremariam said that it was a very challenging year that the airline will never forget. “We lost our beloved staff members and valued customers in the tragic accident of ET302 in March this year. I once again convey my sincere condolence,” he said.
The aftermath of the tragic accident posed series of challenges to the national carrier. Managing the crisis, and the grounding of its B737-800 MAX fleet following the tragic accident has cost the airline direly. As a precautionary safety measure, Ethiopian Airlines was the first carrier to ground its MAX planes on March 10, 2019, a few hours after the plane crash.
Explaining the challenges the airline faced during the budget year, Tewolde said the airline lost revenue as a result of the grounding of the MAX fleet. The airline has faced shortage of aircraft as it grounded four B737-800MAX airplanes and lost one in the accident. It pulled five aircraft out of operation.
The second pressing challenge the CEO cited is surge of fuel price. “Our operation cost has increased significantly as the price of fuel surged by 25 percent in the fiscal year,” Tewolde said. Currency devaluations in some African countries has cost the airline direly. Fund repatriation from these countries has been a daunting task. Ticket sales made in local currencies would fall when changed into US dollars due to currency devaluations.
According to Tewolde, the global economic slowdown has affected the demand for air travel. “Particularly in our continent the passenger traffic and cargo have reduced as the result of the global economic slowdown,” he said.
The report of Ebola outbreak in the Democratic Republic of Congo has also affected passenger traffic influx to the continent. “Though it is an isolated incident in some locations in the DRC the international media exaggerated the news out of proportion and this has negatively affected the passenger traffic as many people coming to Africa have cancelled their trip.”
The economic slowdown at home triggered by the political instability in the country has affected the demand for air travel negatively. The report indicated that the weakened export business has reduced the demand for air cargo service.
Despite all the challenges Ethiopian managed to increase its passenger and cargo traffic, revenue and operating profit. The operating revenue increased by 17 percent and available seat by 13 percent. The national flag carrier transported 12.1 million passengers in the year under review, up by 14 percent. Cargo traffic surged by eight percent.
The airline performed 110,220 flights in the budget year and 80 percent of them departed on time, above the global industry average. The airline launched six new international destinations and boosted its number of international destinations to 121. According to the CEO, 73.3 percent of the airlines passengers are satisfied with the service the airline renders.
The CEO cited the cost reduction program as one of the biggest achievements. According to him, the airline managed to save 145 million USD under its cost reduction initiative. “Our operating profit has increased but the net profit has slightly declined,” he said.
The executive management team seems to be satisfied with the performance of the airline. Accordingly the board of directors of the airline chaired by Abadulla Gemeda, former speaker of the House, approved a 15 percent employees salary increment proposed by the management effective July 8, 2019.
Ethiopian declined to disclose figures citing that the financial report is not yet audited.