Ethiopia Sees Airline Key to Hedging Economy With Exports

ADDIS ABABA (Capital Markets in Africa) — Ethiopia is looking to its national carrier to help it navigate economic shocks from the coronavirus pandemic at a time when airlines across the world are approaching governments for bailouts.

The Horn of Africa country has relied on the Ethiopian Airlines’ network, connecting Africa to the Middle East, Asia, Europe and North America, to increase its exports by 13% to $2.4 billion in 10 months, according to Prime Minister Abiy Ahmed. Coffee shipments increased 16% to $667 million, while cut-flower cargo jumped 84% to $440 million in the period.

“Thanks to our airline, we have seen new customers that have faith in our logistics,” Abiy told lawmakers in the capital Addis Ababa on Monday.

Ethiopian Airlines, Africa’s biggest and most-consistently profitable carrier, almost doubled cargo capacity by converting 22 passenger planes to transport goods, adding to an existing fleet of 10 Boeing Co. 777 and two 737 freighters. That’s as others including Kenya Airways and South African Airways grounded most planes due to virus-related directives by governments, pre-existing financial problems or inadequate preparedness to lift more cargo.

Ethiopian Airlines was most prepared among African carriers to fill the gap left by governments suspending flights. From distributing Jack Ma’s virus-related donations across the continent, the carrier went on to airlift stranded cargo from across the region as well as more of its own produce.

The carrier will still lose almost $1 billion in ticket sales in the 12 months through June, Chief Executive Officer Tewolde GebreMariam said in May. It hadn’t yet needed to call on its state owner for direct funding, he said.

‘Huge Opportunity’
“Coronavirus has created a huge opportunity for our export growth,” Abiy said. The government took a decision to maximize the moment, he said.

Those shipments will help mitigate the effect of the virus on the economy, with the government seeing an expansion of 6% in the year ending in July. That’s double the International Monetary Fund’s forecast and compares with the last financial year’s growth of 9%.

The government has increased investment in the health sector, set up 31 laboratories within three months that are able to test 8,000 samples a day. That capacity could almost be doubled in another month. Authorities have confirmed 2,156 Covid-19 infections and 27 deaths.

The cabinet will likely approve its 2020-21 budget next week, with a plan to increase spending by 23% to 467 billion birr ($13.6 billion).

Source: Bloomberg Business News