Ethiopian Airline’s CEO, Tewolde Gebremariam, had revealed on the 7th of April a staggering $550 million loss in passenger revenue since January. As far as the current situation is concerned, Ethiopian Airlines can survive off its cargo operations alone until early July. However, if the impact of coronavirus crisis on the travel industry persists for more than three months, Africa’s biggest airline might require state help for its survival.
Not a good start to the year
Ethiopian Airlines had started off the year on a positive note after the airline’s tragic B737 MAX crash in 2019. However, the tables quickly turned, as the airline had to cut frequencies due to the spread of coronavirus in China. At the beginning of the year, Ethiopian Airlines was operating to 127 destinations – 17 for cargo and 110 with passengers.
The number of passenger destinations in April has come down to just 19. Even out of these 19, none belong in the top 10 of Ethiopian Airlines. Flights from Addis Ababa to Dubai, Mumbai, Entebbe, Johannesburg, and Nairobi, which are the airline’s most profitable routes, have been suspended indefinitely. Moreover, services to Frankfurt and London are operating at minimal frequencies due to reduced travel demand.
However, Ethiopian Airlines has always had an applaudable cargo presence. With an urgent need to facilitate movements of medical equipment, Ethiopian Airlines has taken this opportunity to broaden its route network. As compared to 10 destinations in January, the airline now serves 74 cargo destinations worldwide.
Is reliance on cargo demand enough?
Being the biggest airline in Africa, Ethiopian Airlines might be able to compensate for the loss in passenger revenue by strengthening its cargo operations. Since the beginning of the coronavirus outbreak, the airline has become a key gateway for medical supply into Africa. The UN World Food Programme (WFP) had recently selected Addis Ababa as a humanitarian shipment hub for Africa to distribute medical supplies using the Ethiopian Cargo network. Hence, Ethiopian Airline’s reliance on cargo operations becomes far more plausible.
In March alone, Ethiopian Airlines transported a total uplift of over 45,848 tons of cargo to different parts of the world, deploying both its freighters and passenger fleet. According to Voice of America (VOA) News, the airline is planning to expand operations further by placing more passenger aircraft on cargo flights. Speaking to reporters, Tewolde said the following:
“We are now focusing on cargo. The cargo business is relatively doing well because urgently required medical supplies are needed all over the world from east to west, west to east, north, south and so on. We are also trying to convert some of our passenger aircraft to cargo.”
Ethiopian Airlines currently operates a cargo fleet of 2 B737’s and 10 B777-200’s. With more than 50 long-haul passenger aircraft still available, the airline can surely diversify its network and optimize its operations by using them for cargo purposes. This might help the airline survive at least until the situation improves.
Do you think Ethiopian Airlines can survive just off its cargo flights? Let us know in the comments.