Addis Ababa – In early March, Ethiopian Airlines
CEO Tewolde Gebremariam told an aviation conference in Addis Ababa the
coronavirus pandemic was “a temporary problem” – comparable to a
natural disaster or a spike in oil prices.
Several weeks later Africa’s largest carrier is
locked in what Tewolde describes as “a struggle that we’re performing for
survival”, ramping up cargo operations while seeking to defer lease
payments on aircraft.
“To be honest with you, I had never thought
that it would reach this stage,” Tewolde told AFP in an interview this
week. “I had never thought that it would spread like this at this speed,
and also in this magnitude. It is just too fast and too expansive and it’s
beyond imagination.”
Across Africa, airlines stand to lose $6 billion in
passenger revenue in 2020 compared to last year because of the coronavirus, the
International Air Transport Association has predicted.
Ethiopian Airlines, the state-owned jewel of the
national economy and a vital source of foreign currency, says it is facing a
revenue loss of $550 million from January to April alone.
“If you put yourself in my shoes, the only way
for Ethiopian Airlines is to expand or refocus its resources, energy and time
on businesses which are not affected by coronavirus,” Tewolde said.
Yet even as the airline moves to assume a central
role in Africa’s pandemic response – ferrying badly needed medical equipment
across the continent – it may last no more than three months before seeking
outside financial help, Tewolde said.
“Will we be able to sustain with only 15% of
our revenue?” he said, referring to the amount typically brought in by
cargo. “For a short period of time, yes. But for how long? Very difficult
to predict.”
Cargo boom
In the early days of the pandemic, Ethiopian
Airlines was criticised domestically for refusing to follow competitors like
Kenya Airways by suspending flights to China, where the coronavirus originated
late last year.
But Tewolde said he would make the same call today,
pointing out that Ethiopia’s first case of Covid-19 – the disease caused by the
coronavirus – turned out to be a Japanese man who arrived in the country from Burkina
Faso.
The airline’s China routes now form the backbone of
its cargo operations as countries scramble to get their hands on
Chinese-produced personal protective equipment and other goods.
This task is made more challenging by the fact that
passenger flights, which can carry cargo in their underbelly, are down so
sharply.
“Right now, there is a severe short-term
shortage of cargo out of China,” said Craig Jenks, head of the New
York-based Airline/Aircraft Projects Inc. consultancy.
Long-haul cargo rates are “at least double
normal”, Jenks added.
At the start of the crisis, Ethiopian Airlines had
12 cargo freighters, and it has since enlisted “10 to 15” passenger
jets to build out its fleet, in some cases ripping out seats, Tewolde said.
That capacity falls short of competitors like
Emirates and Qatar Airways, but Jenks said cargo could still potentially give
Ethiopian as much as 40% of its normal revenue.
Crisis response
Ethiopian has simultaneously embraced work unique
to the coronavirus era.
Top officials from Washington to Tokyo have praised
the airline for repatriating their nationals – including US Peace Corps
volunteers based in 12 countries across the continent.
As the severity of the crisis became clear,
Ethiopian executives “reached out to the diplomatic community to offer
further cargo services and highlight their ability to offer chartered/special
flights”, a State Department official said in a statement to AFP.
All told the airline has “supported the
transport of over 2 100 US citizens and legal permanent residents” to the
tune of around $4.7 million, the official said.
Ethiopian has also worked with Carnival Cruise
Line, which earlier this month hired four charters to repatriate crew members
docked in the US state of Louisiana.
The airline expects to be deeply involved in
Africa’s pandemic response.
On Monday it finished distributing the second batch
of masks, testing kits, ventilators and other supplies donated to African
countries by Chinese billionaire Jack Ma.
And last week the United Nations opened an aid
transport hub in Addis Ababa that will rely on Ethiopian cargo jets to move
supplies and aid workers across the continent.
Tewolde said this represented “a continuation
of our leadership in Africa” even during periods of conflict or outbreaks
of other diseases like Ebola.
“All kinds of problems that Africa has
suffered, we have always stood with Africa,” he said.
‘Whatever it takes’
With the financial toll of the crisis mounting,
Ethiopian is in talks to defer lease payments on aircraft and it may seek
deferrals on some payments of $2 billion in debt, Tewolde said.
The company is determined not to lay off members of
its regular workforce, though it could resort to pay cuts depending on how long
the crisis lasts, he said.
The current cargo boom could start fading in June,
and passenger traffic could stay suppressed well after countries lift travel
restrictions, he said.
Yet Tewolde said Ethiopian remained committed to
long-term growth plans including building a new $5 billion airport outside
Addis Ababa.
“We will do whatever it takes to make sure
that we survive,” he said.
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