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Ethiopian Banking on Cargo Operations and Business Ventures as its Recovery Plan, Dismisses Plans for Fleet Expansion
Cargo business now seems to be the new normal for airlines trying to navigate this COVID-19 pandemic now that there is reduced passenger demand, with Ethiopian Airlines now seemingly headed in the same direction to ensure its survival having lost $550 million between January and April.
The airline CEO Tewolde GebreMariam’s talks involve being cautiously optimistic Ethiopian could withstand this storm by advancing and boosting its cargo business which contributes to 15 percent of its financial dealings and will be operated with the available ten 777Fs and two 737Fs to offer scheduled cargo services. There are also plans to convert 787 passenger aircraft to cargo jets that will also aid in the company’s cargo business.
“We are now focusing in cargo operation. Cargo business is relatively doing well because medical supplies are urgently required all over the world, so cargo airplanes are busy. We are also trying to convert some of our passenger planes to cargo. At the moment, we have a cabin loading but gradually we are going to remove passenger seats and use them for cargo to make sure we survive the global economic crisis and emerge stronger,” said Tewolde in a televised press conference in Addis-Ababa last Tuesday.
The Star Alliance member boasts the largest cargo and logistics operations in the continent and will be looking to use this at their advantage with the CEO dismissing state bailout packages as their immediate option. “Our government has so many priority areas, so we did not ask for help. We are trying to manage the crisis by ourselves,” he said.
Ethiopian Airlines is in a serious financial, operational and commercial crisis due to the overwhelming pandemic, having scaled down its passenger operations by nearly 90 percent and parking 91 of its passenger aircraft at its main hub at Addis Ababa’s Bole International Airport.
Nevertheless, with cargo business already in sight, other business dealings not affected by the pandemic may also come at hand for the airline to use in curbing the daunting impacts of the virus. Focus will be driven to aircraft and engine maintenance which Ethiopian has been doing exceptionally well, as well as the newest venture, the Ethiopian Skylight Hotel which contributes to a small but significant portion of the company’s revenue.
“Our plan is to focus and refocus on those businesses which are not affected by COVID-19 to sustain the airline and pass this challenge,” added the CEO.
The airline has some leased aircraft as part of its fleet with a monthly cost of $30 million, according to the group CEO, Ethiopian has therefore requested its lessors to consider postponement of the payment period but have so far not requested for loan repayment reschedule of $2 billion used in aircraft purchase and infrastructure development.
The CEO also confirmed the airline has put on hold talks on acquiring new fleet from frame-makers with earlier reports on the airline contemplating to ordering additional wide-body aircraft. “we were evaluating the Boeing 787s and Airbus A350s jetliners but the process is now suspended,” noted the CEO
He also confirmed that the airline had put half of its employees on paid leave since it had to suspend 90 percent of its operations dismissing claims of plans to furlough employees during this pandemic, both foreign and local staff.
The East African carrier has been offering repatriation flights to stranded Americans and Canadians in Africa to their homes. It has also operated charter flights from China to the U.S., Europe and Africa transporting critical and much needed medical supplies. The airline also delivered supplies donated by Jack Ma of Alibaba group to 51 African nations in a span of six days.
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