Ethiopian Air in Talks to Back Nigerian Startup Carrier

LUANDA (Capital Markets in Africa) – Ethiopian Airlines Enterprise said it’s in talks to back a start-up carrier in Nigeria in a move that would swell a network of alliances and equity holdings that’s extended the company’s reach across the continent.

Tewolde GebreMariam, Ethiopian’s chief executive officer, plans to hold talks with a Nigerian government minister about the proposal later Tuesday at the Farnborough air show in southern England, he said in an interview in London. Nigeria said earlier this month that a new airline would begin operations this year, with the name to be disclosed this week at the Farnborough expo.

Africa’s most populous nation has struggled to support a viable national airline for decades, with Nigeria Airways folding in 2003, successor Air Nigeria collapsing in 2012 and Arik Air taken over by Asset Management Corp. of Nigeria last year, leading long-haul flights to be suspended. That’s left the oil-rich country dependent on services provided mainly by European and Persian Gulf carriers for trips beyond the region.

Ethiopian Air, by contrast, is Africa’s biggest carrier and the only one that’s consistently profitable after turning Addis Ababa into a hub for travel throughout Africa and beyond by replicating the global interchange model developed by the Persian Gulf carriers. The timetable features almost 70 global cities and close to 60 across the continent.

Ethiopian Air already owns stakes in Malawi Airlines and Togo-based Asky Airlines and aims to secure equity holdings in new carriers in Zambia, Chad, Mozambique and Guinea by the end of the year while helping to manage existing operators in Equatorial Guinea and Democratic Republic of Congo.

Qatar Role?
Tewolde said he expected to face competition over the Nigerian project from Qatar Airways, which has stakes in carriers around the world, including British Airways owner IAG SA and Latam Airlines Group SA, the biggest South American operator. Qatar CEO Akbar Al Baker, in London for the same Skytrax World Airline Awards event, told Bloomberg separately that isn’t the case.

Nigeria said last week that its planned national carrier would be unveiled July 18. The airline will be run as a public-private partnership and should become profitable in three years, according to the government. Aviation Minister Hadi Sirika tweeted Tuesday from Farnborough that he’d held talks on sourcing jets from Airbus SE and planned to meet with Boeing Co. and other suppliers.

Ethiopian Air is working on a repeat order for the Boeing 787 Dreamliner, Tewolde said, with a purchase possible some time this year. The deal could be for the 787-9 variant and would likely double the size of the existing fleet.

The carrier is also looking at the Airbus A350-1000 and seeking to evaluate whether the model would perform sufficiently well out of Addis Ababa, which combines a hot climate with an altitude of close to 8,000 feet, making it a testing location for aircraft. It already operates the smaller A350-900 plane.

The Boeing 777X is also in the running but could be too pricey, Tewolde said. The CEO has said that plans to establish a fleet of smaller jetliners — either Embraer SA’s E195 or the former Bombardier Inc. C Series, now the A220 after being taken over by Airbus — have been shelved as passenger figures suggest bigger narrow-bodies would be a better fit.

Source: Bloomberg Business News