Government To Cede Minority Stake in Ethiopian Airlines

 - June 11, 2018, 10:24 AM
Ethiopian Airlines recently celebrated the delivery of its 100th aircraft, a Boeing 787-9.

As part of an effort to alleviate a foreign currency crunch, the government of Ethiopia has passed a resolution to partially privatize the country’s giant state-owned enterprises, including the 100 percent publicly owned national flag carrier, Ethiopian Airlines.

Ethiopian Airlines Group CEO Tewolde GebreMariam told AIN that the government will put up for sale shares of the airline for foreign and local investors. However, authorities haven’t yet determined the amount. GebreMariam said the government of Ethiopia will retain the majority stake of the airline.

According to the International Air Transportation Association (IATA), Ethiopian became Africa’s largest airline, overtaking Egypt Air and South African Airways in 2014. In its 2016-2017 fiscal year, the Star Alliance member airline generated revenue of $2.71 billion and a net profit of $232 million.  

The airline transported 9 million passengers and hauled 338,000 tons of cargo in the last fiscal year. It received its 100th aircraft, a Boeing 787-9, last week. Its young fleet includes 787s and Airbus A350s, and its books show another 62 aircraft on order, including the Boeing 737 Max. The airline has grown at a rate of 25 percent in the past successive years.

Local industry experts fear that the privatization process might slow down the fast growth of the airline, however.  

The CEO defends privatization, insisting it will help the company grow further. Ethiopian has so far managed to expand into a group consisting of eight major profit centers: Ethiopian Regional Services, Ethiopian International Services, Ethiopian Cargo & Logistics Services, Ethiopian Maintenance Repair and Overhaul (MRO) Services, Ethiopian Aviation Academy, Ethiopian In-flight Catering, Ethiopian Ground Services, and Ethiopian Airports Services. According to GebreMariam, the privatization plan will also involve the hospitality and the aerospace manufacturing businesses.

Ethiopian holds a 40 percent stake in Togo-based Asky Airlines, another 40 percent ownership in Air Malawi, a 49 percent share in Zambian Airways, ownership stakes in the Chadian and Guinean airlines, and 99 percent control of an emerging airline in Mozambique. Consequently, the privatization of the national flag carrier might require cross-equity partnerships, which GebreMariam sees as an important step to expand Ethiopian’s business portfolio.