Ethiopian Airlines loses $550 million, but believes it can survive

Africa’s biggest airline, Ethiopian Airlines, has lost more than half a billion dollars since January because of the coronavirus pandemic.

Despite the financial loss, the company’s CEO remains confident the airline can keep flying, in part by increasing its cargo business.

Ethiopian Airlines CEO Tewolde Gebremariam told reporters on Tuesday the airline had lost $550 million between January and April, as the coronavirus pandemic brought passenger traffic to a near-complete halt.

He acknowledged the airline is in a serious financial crisis, and also reported that three airline employees have tested positive for COVID-19. He said the three are in stable condition.

But, Tweolde expressed his belief that Ethiopian Airlines will ride out the current storm. He said the company was cushioning the financial blow by finding new streams of income.

“We are now focusing on cargo. The cargo business is relatively doing well because urgently required medical supplies are needed all over the world from east to west, west to east, north, south and so on. We are also trying to convert some of our passenger aircraft to cargo,” said Tweolde.

He also said the company has saved money by cutting back deeply on daily flights and suspending talks with Boeing and Airbus to replace older aircraft in its fleet.

Airline industry experts say some of Africa’s air carriers are likely to go out of business during the ongoing crisis.

John Grant, a senior analyst at the aviation data firm OAG, told VOA via a messaging app that Ethiopian Airlines was better positioned “than any other African carrier.”

“Their management team has done a better job. They have a more diverse network. They are using modern aircraft. They’ve got a good hub in Addis that feeds Europe to South Africa. It feeds West Africa to Asia and the Middle East. It feeds South Africa up to the United States and other points. Of all the African carriers, they are probably regarded and perceived as being the best in class,” he said.

Grant also lauded the company’s move into the cargo market.

“Cargo capacity at the moment is very, very scarce around the world. And by virtue of having both dedicated aircraft and swapping in some passenger aircraft and using them for cargo flights, that in the short term can generate some revenue. It’s never going to generate as much revenue as the passenger flights. But it keeps the cash coming in and at the moment the rates for cargo are anything up to six times what they were three, four months ago because there is this scarcity and this urgency to move items quickly,” said Grant.

Before the coronavirus pandemic, Ethiopian Airlines was Africa’s busiest carrier, making more than 350 flights per day to more than 100 destinations.