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JPMorgan Chase & Co
Ethiopian Airlines Enterprise, the first carrier outside Japan to start flying Boeing Co.’s 787 Dreamliner, will add 14 new aircraft this year as part of its plan to boost revenue five-fold by 2025, Chief Executive Officer Tewolde GebreMariam said.
The company is in a “fast growth” phase, targeting annual sales of $10 billion a year by the middle of next decade from what will then be a fleet of 120 planes, he said in an interview yesterday in the capital, Addis Ababa.
“There is a need to reinvest profit in financing a new fleet and in new infrastructure,” Tewolde said. “There’s a lot of investment going on.”
Ethiopian Airlines, which flies to 43 African destinations and is sub-Saharan Africa’s second-biggest carrier, is expanding as economic output on the continent increases. Growth is forecast to accelerate to 4.8 percent next year from an estimated 4.5 percent this year, according to data on the African Development Bank’s website.
Global airline profits are expected to more than halve this year to $3 billion, as recessions in the U.K., Spain and other European countries curb demand, according to the International Air Transport Association.
Ethiopian Airlines posted a profit of 732 million birr ($41 million) in the 12 months to July 7, the end of Ethiopia’s fiscal year, compared with 1.23 billion a year earlier. Revenue grew 36 percent to 33 billion Ethiopia birr, according to Tewolde.
“The previous year net profit was exaggerated with the windfall of the Ethiopian birr devaluation,” he said.
The company, which began flights in 1946 and now flies to 69 international destinations, received the first of 10 Dreamliners last month, after receiving a $1.2 billion loan from JPMorgan Chase & Co. backed by credit support from the U.S. Export-Import Bank (JPM) that covered 85 percent of the cost. Another five Dreamliners are expected before December, Tewolde said.
Ethiopian Airlines, which now has a fleet of 50 aircraft, also received its first Boeing 777 Freighter aircraft this month, with another five ordered for 2014, he said.
The carrier plans to split operations into seven businesses including an aviation academy, cargo, maintenance and repair units, which by 2025 will generate at least half their revenue by providing services to other companies, Tewolde said. The units will be formed this fiscal year, he said.
“It may be difficult to achieve such extraordinary growth just by being an airline,” he said. “We want to develop the aviation services as business units on their own.”
In addition to Bole International Airport in the capital, Ethiopian has a hub in Lomé, Togo, in partnership with ASKY Airlines that it owns 40 percent of and manages, Tewolde said. It is planning a similar venture in southern Africa, possibly in Zambia, he said.
Ethiopia’s government will expand Bole to cope with demand through 2025 and is planning a second international airport near Modjo, 76 kilometers (47 miles) southeast of the capital, Tewolde said.
To contact the reporter on this story: William Davison in Addis Ababa at firstname.lastname@example.org
To contact the editor responsible for this story: Antony Sguazzin at email@example.com