Ethiopian Airlines 2014/15 fiscal year net profit hits 3.5 Billion Birr

Amid a turbulent time for African airline industry, Ethiopian Airlines made a record-high net profit of 3.5 billion birr in the 2014-2015 fiscal year that ended in June 2015.

Ethiopian made an operating revenue of 49.4 billion birr and an operating profit of 4.7 billion birr. In the 2013-2014 fiscal year the airline made an operating revenue of 46.5 billion birr and a net profit of 3.15 billion birr.

trends-airbus-boeing-slideshow1-2During the 2014-2015 fiscal year Ethiopian transported 6.4 million passengers and 329,000 tons of cargo. In the previous fiscal year the airline transported 6 million passengers and 187,000 tons of cargo. Ethiopian Cargo is growing fast. With nine dedicated cargo aircraft Ethiopian is the largest cargo operator in Africa. In June 2014, the International Air Transport Association (IATA)  declared that Ethiopian is the largest airline in Africa in terms of revenue and profit.

CEO of Ethiopian Airlines Aviation Group, Tewolde Gebremariam, attributed the record performance to the dedication of employees of the company and the management team.

Tewolde told The Reporter that Ethiopian has been implementing its Vision 2025 successfully. “We have just completed the first phase (five years) of the 15 years strategic road-map. The results show that we have exceeded all our targets planned for the period,” he said.

In 2004/05 Ethiopian revenue was only USD 0.49 billion. In just ten years’ time the airline increased its revenue by 500 percent to a staggering 2.42 billion dollars in 2014/15. In terms of route network and number of aircraft the airline grew five fold in seven years’ time.

Tewolde said that under the Vision 2025 the airline planned to fly to 90 international destinations by 2025; but it is now flying to 91 international destinations. “This means that we achieved this key performance indicator 10 years ahead of our target period. Again, in vision 2025, we planned to operate 63 aircraft by 2015 but we now have 77 aircraft in our services. The same is true to our profit; in our Vision 2025, we planned to earn net profit of 2.9 billion birr by 2014/15 fiscal year but actually we earned 3.5 billion birr net profit.”

Ethiopian made the record performance at a time when major African carriers declared spiral loses.

The 2014/15 fiscal year indeed was a turbulent year. Major African airlines such as South African Airways (SAA), Egypt Air and Kenya Airways (KQ) declared bankruptcy.

Two weeks ago Ethiopian arch rival KQ reported its largest annual loss ever, a pre-tax shortfall of 293 million dollars for the 2014-2015 year. South African Airways registered a net loss of 223 million dollars in the fiscal year ending March 2014 and Africa’s oldest airline, Egypt Air incurred a net loss of 350 million dollars in the fiscal year that ended June 2014.

“The fiscal year of 2014/15 was one of the most challenging year for the African Aviation Industry,” Tewolde said. “It started with one of the worst epidemic disease of Ebola which has negatively affected air travel demand in the continent. Although the decline in Crude oil price was a welcome event for airlines on the cost reduction side, it severely affected the economies of all of the oil exporting countries like Nigeria, Angola, and Gabon.”

Tewolde told The Reporter that the war in Yemen has affected Ethiopian flight paths that forced the airline to fly longer routes with an average extra cost of USD 2 million per month. “The depreciation of the Euro also affected African economies. The cumulative impact of all these daunting challenges in the African airline industry was a negative growth (-3 percent) in traffic),” he said.

However, Tewolde said Ethiopian Airlines has emerged stronger from these challenges and with record profit of 3.5 billion birr mainly because of the usual dedication, hard work and commitment of its employees; and strong strategic and operational leadership by the management team and the board of directors.

“I cannot comment on other airlines performance but I wish them the best of success and we would like to cooperate with all African sister airlines for the development of the aviation sector in the continent,” he concluded.

The national flag carrier which was established in 1945 will celebrate its 70th anniversary next year. Ethiopian has created 8,000 direct jobs and 20,000 indirect jobs. The airline has expanded its aviation academy which now has a capacity to train 4,000 students. Currently, the aviation academy is training 1,300 pilots, aircraft maintenance technicians, flight attendants and marketing personnel. The airline spent 80 million dollars on the aviation academy in the past five years. The airline is also investing heavily on its maintenance facility. The airline spent in excess of 500 million dollars in building its maintenance, repair and overhaul capacity. It is building new maintenance hangars, a state-of-the-art cargo terminal and catering facility.

INTERVIEW-Ethiopian Airlines says expansion on course as profit jumps

ADDIS ABABA, Aug 20 (Reuters) – Ethiopian Airlines is powering ahead with a plan to expand its fleet and route network after exceeding its profit target for the 2014/15 year, its chief executive said in an interview.

The state-owned carrier is ranked the largest in Africa by revenue and profit by the International Air Transport Association (IATA), the global industry body.

CEO Tewolde Gebremariam said the firm had revenue of 49.4 billion birr ($2.39 billion) in its fiscal year ended July 7, exceeding a target of 43 billion birr.

It attributed the growth to a rise in passenger numbers and to expansion of maintenance, catering and aviation training services.

Passenger numbers for the period were not immediately available. Ethiopian Airlines flew six million passengers in the prior year, up from 5.22 million in 2012/13.

Net profit for the year ended last month rose to 3.5 billion birr for the same period, well above the expected 2.9 billion birr.

“This shows you that we have overgrown,” Tewolde said in the interview with Reuters.

Ethiopian Airlines plans to increase revenue to $10 billion by 2025 by nearly doubling its fleet of 77 aircraft and opening new routes.

It currently has 77 planes, including 13 787-8 Dreamliners by Boeing. It ordered six more Dreamliners in June.

It has 50 planes on order altogether, including 14 A350s by Airbus, and expects to increase its fleet of Dreamliners to 30 in 10 years’ time, he added.

Tewolde had a word of caution about the ongoing impasse in United States over the U.S. Export-Import Bank, which lends money to U.S. exporters and their foreign customers like Ethiopian Airlines.

The 81-year old Ex-Im Bank saw its charter lapse last month after conservatives in the U.S. Congress cast it as a promoter of “crony capitalism” for multinationals such as Boeing and General Electric.

“It is an essential financial instrument for us. We want the U.S. Exim Bank to reopen and that was our main point of discussion with President Obama,” Tewolde said, referring to the U.S. leader’s visit in July.

“We want to continue because that is our main, and perhaps only, means of financing our airplanes and financing our growth in the future.”

The airline has targeted the growing trade ties between Asia and Africa in recent years, as well as that with Brazil by inaugurating flights to Rio de Janeiro. It also launched flights to Los Angeles and Toronto this year.

Tewolde said Ethiopian Airplanes is planning Jakarta, Ho Chi Minh City and the Chinese cities of Chengdu and Shenzhen as its next Asian destinations, as well as adding Oslo in Europe and New York and Chicago in the United States.

Sources: Reuters, Ethiopian Reporter, CNBC & CCTV Africa.