The Airline That Has Put Africa on Global Map

In June 1945, a little known airline emerged in the heart of Africa, Ethiopia. Emperor Haile Selassie at the time thought his country needed to connect with the region and rest of the world and he envisioned an airline helping to achieve that target. 

Selassie, a prominent Political figure who helped restore Ethiopia’s independence and was the Time Magazine’s Man of the Year in 1935, sought to use the airline to modernize his country.

With the support of Transcontinental Air Transport Inc. and Western Air Express – later merged into Trans World Airlines (TWA) – Ethiopian Airlines was established. 

In April 1946 the airline started a weekly service between its capital Addis Ababa and the Egyptian capital Cairo via the Eritrean capital of Asmara. 

The airline, then operating as Ethiopian Air Lines and managed by TWA, relied on American pilots and started with five small airplanes known as Douglas DC-3 propeller-driven aircraft.

“Ethiopian DC-3 is a living witness for the success of Ethiopian in the past,” the airline once described the Douglas DC-3, which until now, is considered the most successful airliner in the formative years of air transportation.

Douglas DC-3 aircraft featured what one would characterize as spacious cabin at least going by the 1940’s and 1930’s standards, with a seating for up to 21 passengers. 

The interior was not necessarily attractive but it was useful and functional to fly a fair number of passengers, with attention paid to safety features such as emergency exits and lighting. 

The initial Ethiopian Douglas DC-3s were military reformed. The seating consisted of folding canvas benches along the sides, with the cabin’s centre being used for cargo loads.

These small aircraft enabled Ethiopian to operate services to Djibouti, Aden (Somalia), and a domestic flight to Jimma in Oromia region.

In 1950’s, the airline started expanding to new routes including to Nairobi (Kenya), Port Sudan, Bombay (India), Tanganyika (Tanzania), and charter flights to Jeddah during the Hadji pilgrimage period to Makkah.

By 1957, Ethiopian had launched long-haul services starting with Frankfurt in Germany. The same year saw the Ethiopian captain in command for the first time, which kicked off the replacement of American pilots.

The airline knew it wouldn’t rely long enough on foreign pilots and technicians, and by 1971, Ethiopian Airlines was managed and staffed by Ethiopian personnel. A remarkable success.  

The Glory Days 

Since then, Ethiopian Airlines has defied odds and grown in leaps and bounds to become the largest and most profitable airline in Africa and one of the fastest growing airlines in the world. 

As Ethiopian marked the 75-year anniversary, Tewolde GebreMariam, then airline CEO in 2021 said that they had made a signature statement and introduced the “many firsts” in Africa.

Ethiopian introduced the first Jet aircraft in Africa, the first East Africa to West Africa scheduled flight, the first airline from the Western Hemisphere to fly to China, and the first scheduled service between the capitals of the most populous nations in the world (from New Delhi to Beijing).

The glory days that the Ethiopian Airlines enjoyed are still here. The airline currently enjoys the prominence that no any airline in Africa enjoys.

To start with, Ethiopian Airlines is a subsidiary of Ethiopian Airlines Group, which is wholly owned by the Government of Ethiopia. Apart from running the airline, the Group offers airport services, hotel services, as well as aviation related training services. 

As part of its airport services offerings, the Group offers landing, parking, lighting, terminal facility, and passenger services, as well as office rentals, warehouse, restaurants, shops, and checkin counters. 

Its aviation training academy which has trained many pilots in Africa recently upgraded to a university status, signaling yet another milestone in training the next generation of pilots and cabin crews on the continent. 

Ethiopian launched its first hotel in 2019 with a total of 373 rooms. The hotel capacity was expanded in 2023 to 1024 rooms. This was in addition to the existing in-terminal hotel with a capacity to accommodate 97 guests. 

The Group also has a lucrative cargo business, which currently generates almost half of the company’s revenue. In 2021/2022 fiscal year alone, Ethiopian transported 750,000 tons of cargo, a record volume given that the rest of the airlines were grappling with the impact of Covid-19 pandemic. 

The kind of 360 business model has enabled the Group to generate significant cash flow, which has ultimately financially empowered the company to take up controlling stake in major airlines across Africa. 

Business Outlook

Ethiopian has grown its business to impressive levels over the years.

It carried 9 million passengers in 2021/2022 fiscal year, according to the Group’s annual fiscal reports. Total revenue grew 81% to 253.05 billion Ethiopian Birr ($4.5 billion), while net profit increased 139% to 47.5 billion Ethiopian Birr ($839 million).

The following year, in 2022/2023 fiscal year, Ethiopian Airlines earnings jumped 20% to $6.1 billion, according to the company’s Chief Executive Officer Mesfin Tasew.

The airline transported 13.7 million passengers and 723,000 tons of cargo in the same fiscal year, thanks to the growing passenger demand in Africa and internationally.

The Ethiopian national carrier has increased its fleet progressively. It added 11 passenger planes in 2022-23 fiscal year, bringing the total to 146 planes.

The airline converted two into cargo planes last year and introduced a freighter service to Casablanca (Morocco), bringing the total number of cargo planes to 17, as of January 2024.

Ethiopian Airlines introduced seven new international destinations in 2022-23, including Copenhagen, Atlanta, and Karachi. The airline currently serves 136 international passenger and cargo destinations, including 63 African cities.

This growth can be attributed to the governance independence and protection the Ethiopian government has given its national carrier. While the government controls 100% stake in the airline, it does not interfere in the airline’s decision-making processes.

The Government’s protectionism strategy has also allowed the airline to thrive and kept domestic market from foreign airlines. The Government has kep its economy from foreign investors to the extent that most of the economic sector are dominated by the Government and domestic investors.

It wasn’t until recently that the Government started opening up for foreign investors. It started with the telecommunications sector, the banking sector, and the sugar. There were plans to privatise the airline but those plans were put on hold.

This sort of protection has allowed Ethiopian Airlines to thrive. The airline has also leveraged traditional and new financing models to finance its operations.

For instance, it has been borrowing money from foreign banks and organizations to finance the purchase of aircraft. These loans have different interest rates, ranging from as low as 0.35% to as high as 7.35% per year.

Just last year, it announced that it had secured a loan worth $450m from banking giant Citi Group to finance five new aircraft. The airline will purchase all five jets from Boeing including three passenger 737-8 jets and two 777F planes for freight operations.

More importantly, the airline has benefited from the growing demand in passenger travel both in Africa and across the world. Although Africa account for 2.1% of global air transport activities, the continent’s air transport sector has evolved over the years.

Ethiopian Airlines has used this to its advantage and has expanded its businesses units across major African cities. The airline has made significant investment over the years into reviving African airlines.

Currently, it has significant and controlling shareholding in Zambia Airways (45%), Mozambique Airlines (99%), Asky Airlines (25.26%), Malawi Airlines (49%), and Chad Airlines (49%).

It was looking to buy stake in Congo Air and Nigeria Air.

The airline also has strategic investments across logistics, manufacturing services, information technology, and telecommunications.

Ethiopian Airlines has faced some headwinds including the Covid-19 pandemic, rising fuel prices, and a fatal accident in which Ethiopian Airlines Boeing 737 Max crushed and killed hundreds.

While it has overcome some of these challenges, questions and concerns still remain around whether the airline is doing the right thing with making more orders of the same aircraft type that killed hundreds of passengers.

The airline is also facing competition in Africa where countries such as Uganda, Tanzania and South Africa are reviving their carriers, and others such as Rwanda, Senegal, Ivory Coast, and Ghana are becoming more aggressive.