Ethiopian Airlines Business Information, Profile, and History

Company Perspectives

Ethiopian is a business enterprise committed to the basic objective of providing safe, reliable and profitable air transport services for the passenger and cargo as well as other aviation related services. The airline renews its pledge to further develop its total network with continued emphasis on interconnecting Africa and linking it with the rest of the world. Ethiopian is committed to the provision of quality service to its customers. In order to ensure this, the airline will strive to maintain a highly trained, motivated and dedicated workforce and enhance its internal capacity in various fields.

History of Ethiopian Airlines

Ethiopian Airlines is "Africa's Link to the World." More than 1.5 million people a year fly the carrier to 22 domestic and 44 international destinations on four continents. The airline claims the largest network of routes within Africa.

Since its launch in 1946, Ethiopian has been a pioneer in African aviation industry. It has maintained an excellent reputation under the various governments that have ruled Ethiopia over the years.

Cargo operations are a vital part of business; Ethiopian also has a wide array of ancillary services such as Africa's leading maintenance and training operations. The fleet includes more than two dozen airliners, while various small planes, helicopters, and even crop dusters are employed in the side ventures.

Formation Following World War II

Ethiopian Airlines, formerly Ethiopian Air Lines Inc. (EAL), was created by the decree of Emperor Haile Selassie I at the end of 1945. Trans World Airlines (TWA), the U.S. giant that helped form many carriers in developing nations after World War II, was contracted for technical assistance. Though TWA controlled a couple of board seats for a while, the government of Ethiopia owned all of the airline's equity.

Five war surplus DC-3s formerly based in Cairo made up the original fleet. Within a few years, the carrier had about 20 planes. By this time, EAL had begun to turn a consistent profit, making it a contrast to other airlines being run at a loss by developing countries looking for prestige. The company's international business tended to offset losses on domestic services. Internal routes were doing a thriving cargo trade, carrying tribal commodities such as crocodile skins and livestock. Within a few years, the airline would make it feasible to export coffee from the country's otherwise inaccessible growing areas.

The airline's first scheduled flight was to Cairo from Addis Ababa, with a stop in Asmara, Ethiopia, and occurred on April 8, 1946. Weekly flights to Djibouti and Aden were added later. Connecting the country with the outside world was more of a priority than developing an internal route network, though a route between Jimma and the capital was added.

In 1947, the airline acquired more aircraft from the U.S. government and introduced colorful new color livery for the planes. By the end of the decade, Ethiopian was flying as far as Bombay and Port Sudan, while new grass airstrips cleared the way for more domestic stops. The new air connections often reduced to hours journeys that once took weeks by mule or days by train through Ethiopia's extreme, mountainous terrain.

The international route network expanded northward from Cairo to Athens and then Frankfurt in the late 1950s. In 1960, a second leg was extended to Monrovia, Liberia, via Khartoum, Sudan; Lagos, Nigeria; and Accra, Ghana. The 19-hour trip was offered on a weekly basis at first. This was considered a milestone in African aviation as it was the continent's first east-west connection since the days of Imperial Airways. Before then, passengers would fly to different countries in Africa via hubs in Europe.

Three new Douglas DC-6 airliners and three Convair 240s were acquired. However, the DC-3 fleet would remain in service for decades. The company had begun operating a small fleet of helicopters in 1957.

Revenues were $8.5 million in 1959, according to a profile of the carrier in Aviation Week. EAL then had about 900 employees, most of them locals; 19 of its 40 fixed-wing pilots were from Ethiopia.

First Jets in 1963

Ethiopian began flying jets, starting an Addis Ababa-Nairobi service with Boeing 720s in January 1963. According to Aviation Week, this was necessary to keep the airline from being overshadowed on international routes by other jet-flying competitors. (Most of its rivals were associated with the state airlines of the European colonial powers.) The new jets were financed by a $12 million loan from the Export-Import Bank.

The New Boeing 720s required an extra-long runway in order to operate from the thin air at the capital's 8,500 feet elevation, so Ethiopian moved its operations from the Lideta airfield to the new $8.5 million Bole International Airport.

The company was renamed Ethiopian Airlines in 1965 as its ownership structure changed from corporation to share company. It continued in its role as a leader in the continent's aviation industry. Schools for pilots and mechanics were established at the Bole Airport to train personnel from Africa and the Middle East. The fast-growing airline ended the decade with more than 2,000 employees.

Pioneering long range, thinly traveled routes to unique city pairs was an enduring part of Ethiopian's methodology, noted Air Transport World. In 1975, EAL introduced the first direct service to China (Beijing) from Africa. While such moves were risky, they attracted few competitors and generally became profitable within a few years.

1974 Revolution

Some changes at the airline followed after Mengistu Haile Mariam came to power in a socialist revolution in 1974. According to a later profile in the New York Times, the quality of service plummeted as staffing became bloated. By the end of the 1970s, the airline had nearly 3,400 employees. Naturally, it was soon losing money.

Captain Mohammed Ahmed, a longtime veteran of the company, was designated chief operating officer in 1980 and tasked with implementing a turnaround. He cut the staff by more than 10 percent while running EAL on a strictly commercial basis.

While Ethiopia's new government was sympathetic to the Soviet Union, EAL continued to choose Western-made aircraft. The fleet was replenished with purchases of Boeing 727s in 1979 and wide-body Boeing 767s in 1984.

Interest payments on the new planes, unfavorable exchange rates, and a slowdown in business from the drought conspired to wipe out the company's restored operating profits in the mid-1980s, Capt. Mohammed explained to the New York Times. EAL continued to have a stellar reputation for maintenance and training. It also had an impeccable credit rating. By the end of the decade, Britain's Financial Times was calling it the most profitable airline in Africa. It posted net income of $24 million on revenues of about $240 million in the 1988/89 fiscal year.

1991 Coup

In 1991 a coup toppled Mengistu's reigning Marxist dictatorship; EAL temporarily relocated its planes to Nairobi as the fighting approached the capital. One of its aircraft, though, was damaged by shrapnel in the breakaway province of Eritrea. In spite of the disruption and chaos, and a downturn in the global aviation industry, and the elimination of tourism due to the war, EAL managed to post a profit. A manager told Aviation Week & Space Technology that cargo operations, which supplied more than one-third of revenues, were keeping the airline in the black. Interestingly, the airline formed a crop duster unit in 1993.

50th Anniversary in 1996

The government installed a new management team led by Ahmed Kellow, an Ethiopian native who had taught finance at the University of Wales, in 1994. At the time of Ethiopian's 50th anniversary in 1996, the route network extended as far as Beijing, London, Johannesburg, and the Ivory Coast. Yet another CEO was named in 1997, longtime EAL veteran Ato Bisrat Nigatu.

In July 1998, EAL launched its first services to the United States, which was home to about half a million Ethiopian expatriates. The airline continued to order new aircraft, adding the latest model B737s for mid-length routes.

War once again disrupted plans after a border dispute led to fighting between Ethiopia and Eritrea in May 1998. EAL again relocated its main operations to Nairobi for most of the two-year conflict. This resulted in an enormous increase in fuel costs due to rerouting international flights out of Eritrean airspace. Even with these challenges, Ethiopian was increasing its frequencies and adding new routes. Its financial losses in the late 1990s were minimal.

EAL continued to thrive even in the global aviation downturn which followed the September 11, 2001 terrorist attacks on the United States. The company posted a net profit of $4.5 million on revenues of $278 million (ETB 2.4 billion) in 2000. After the fall of Air Afrique in 2002, no one rivaled Ethiopian in terms of covering the continent of Africa, noted Air Transport World.

In 2003, the airline changed its livery for the first time in 56 years. Construction was beginning on a new cargo terminal and a new maintenance hangar. EAL named Ato Gima Waka its latest CEO in 2004 following the retirement of Ato Bisrat Nigatu. In the same year, the airline's Scandinavian gateway, a vital source of tourism traffic, was relocated from Copenhagen to Stockholm. A second China destination was added, the southern trade center of Guangzhou. It had income of $43.4 million on revenues of $495 million in 2005. While expanding its reach overseas, the airline was beginning to face competition from new low-cost carriers on some of its African routes.

"Dedication brought us this far and passion will take us even further" was the company's 60th anniversary slogan. A loyal Boeing customer, Ethiopian began operating its first Airbus, an A330, on a leased basis in 2006. Ethiopian was a launch customer for the Boeing 787 Dreamliner, however, which was due to be delivered beginning in 2008.

Principal Competitors

British Airways plc; Deutsche Lufthansa AG; Kenya Airways Limited.

Chronology

• Key Dates
• 1946 Ethiopian Airlines begins operations with flights to Cairo.
• 1957 Network stretches north to Hamburg, Germany.
• 1960 Ethiopian develops Africa's first scheduled services connecting east and west.
• 1961 Revenues surpass $10 million.
• 1963 First jets arrive.
• 1974 Country undergoes Socialist revolution, which affects the company.
• 1975 TWA management contract ends; EAL introduces first direct flights between Africa and China.
• 1991 Marxist dictatorship is overthrown in a coup.
• 1998 First services to the United States are launched.
• 2003 Construction begins on new cargo terminal and maintenance hangar.