• To sell 3 Boeing 757s
• Signs agreement for four B777 freighters
The management of Ethiopian Airlines has selected the renowned international bank, ING, and two other banks to finance 15 passenger jet aircraft (10 Boeing787-8 Dreamliners and five Boeing 737-800) purchases from the US aircraft manufacturer, Boeing. The financing scheme includes the purchase of two spare engines for each aircraft.
At the 20th African Aviation Conference held from September 12-14 at the Sheraton Addis under the theme ‘Air Finance for Africa,’ Kassim Geressu, Ethiopian chief finance officer, who made a presentation said that the management of Ethiopian selected ING, JP Morgan and Emerging Africa to finance the 15 jetliners purchase. Emerging Africa is a London-based development financial institution.
Kassim told The Reporter that last March that the management of Ethiopian sent a request for loan proposals to 22 international financial institutions. Nine of the banks under three groups submitted proposals to Ethiopian. After long and thorough evaluations, the management selected the group led by ING. Kassim said the management informed the banks of its decision last week. Kassim declined to disclose the names of the other banks that participated in the bid. Representatives of ING were having a meeting with top Ethiopian management team this week at the headquarters of the airlines in Addis Ababa.
The types of loans required by Ethiopian are Finance lease. EX-IM guaranteed loan, Pre-Delivery Payment (PDP) loan and Junior loan. The total amount is estimated to be around 1.45 billion dollars.
Ethiopian has secured a loan guarantee for the 15 aircraft purchase from the US Export Import Bank, EX-IM Bank.
The national flag carrier placed orders for 10 Dreamliners in 2005 valued at 1.5 billion dollars. Originally, deliveries were scheduled for 2008-2010, which Boeing failed to meet. Now Ethiopian expects to receive the first two Dreamliners next March. Ethiopian will be the first African airline to operate Dreamliner aircraft. Ethiopian has also ordered 10 B737-800, and 12 Airbus A350 XWB. Ethiopian is the first airline in sub-Saharan Africa to order Airbus a new extra wide body aircraft, scheduled to come out of airbus’s final assembly line in Toulouse in 2014.
The airline took deliveries of 5 B777-200LRs and eight Bombardier Q400 in less than two years. In the past year alone, the airline acquired 11 new aircraft. In November 2010, Ethiopian became the first African airline to own and operate the world’s longest-range airplane-B777-200LR. Last June TAAG Angola became the first African carrier to own and operate the Boeing 777-300ER. Boeing’s B777-200ER and B777-300ER Worldliner are two of the longest-range airplanes in the world.
Currently, Ethiopian operates a young fleet of 47 aircraft (39 jet, all of them being Boeing except two MD11 freighters and eight turboprops). According to AWAS, an Ireland-based leasing company, with 34 aircraft on its order book, Ethiopian has the largest aircraft order list in Africa to be followed by South African Airways and Royal Air Marroc each of which has 21 aircraft on order. Ethiopian’s rival, Kenya Airways, has 14 aircraft on order. SAA operates 55 aircraft, RAM 56 and KQ 31. The management of Ethiopian plans to increase the number of jet aircraft to 112 by 2025.
Ethiopian CEO Tewolde Gebremariam told The Reporter that since his airline has always been profitable, aircraft financing is not a problem. “If you are profitable and if you have a good credit history, securing a loan would not be a big problem. And we have both-clean balance sheet and commendable credit history.”
In a related news, the management of Ethiopian is negotiating to buy additional Bombardier aircraft. Tewolde told The Reporter that his management is in talks with executives of the Canadian air framer, Bombardier. Ethiopian has acquired eight Q 400s turboprops that it deployed in its domestic and regional routes. Currently, the management of Ethiopian is negotiating with executives of Bombardier for additional aircraft purchase. Representatives of Bombardier were in Addis Ababa this week. Ethiopian is also negotiating with Bombardier to buy the same aircraft for ASKY Airline, a new start-up airline based in Lome, Togo.
ASKY was established in 2009 by West African private investors. Ethiopian owns a 25 percent stake in ASKY. Ecobank, BIDC, BOAD, SAKHUMNOTHO Group Holding and other west and central private investors have shares on the new pan-African airline that serves 17 destinations in west and central Africa. Currently, ASKY operates three aircraft-2 Boeing 737-700 and one Bombardier Q400 - all leased from Ethiopian. Ethiopian has a five-year management contract with ASKY. The management of ASKY is now to buy Q-400 aircraft and Ethiopian is negotiating with Bombardier on behalf of ASKY.
At the 20th African Aviation Conference, Zemedeneh Nigatu, managing partner of Ernest & Young, said that the partnership forged by Ethiopian and ASKY was a perfect example of partnership among African carriers. “I strongly recommend partnership among different African airlines. An African airline investing in another African airline,” Zemedeneh said. “It has two advantages. First it will enable them to source more financing. Second it will put them in a better position in competing with carriers coming from other parts of the world.”
Tewolde said that more than 75 percent of the international passenger traffic in Africa is carried by non-African carriers, adding that the market share of African airlines is shrinking. “We should blame nobody else but ourselves,” Tewolde told participants of the conference. He attributed the problem (the increasing market share of non-African carriers) to the lack of cooperation among African nations in air transport.
In his keynote address, Ethiopian minister of transport Diriba Kuma said that non-African carriers were invading African skiess adding that they were weakening African airlines. “African states and airlines should cooperate and work together in developing air transport in Africa. If we don’t work together or we shall all perish together,” Deriba said. He warned that the African aviation industry may weather away unless African states enhance cooperation in developing the African airline industry.
African states are often criticised for failing to promote inter-Africa air traffic while opening their skies to foreign airlines.
In a related news, the management of Ethiopian is to phase out its three ageing Boeing 757-200 aircraft from its fleet in February next year. Kassim told The Reporter that the aircraft are already up for sale. “We are negotiating with potential buyers,” Kassim said.
Meanwhile, the management of Ethiopian signed a deal with Boeing for the purchase of four new B777 freighter aircraft. The jetliners will be delivered to Ethiopian after three years. The agreement was signed by Ethiopian CEO and representatives of Boeing at the headquarters of Ethiopian on September 2. The deal will be announced by the two parties soon.
The growing demand for cargo flight services prompted Ethiopian to place orders for the new B777 jetliners. Recently Ethiopian signed a lease agreement with GECAS for two B777 aircraft to be delivered in September 2012. The lease agreement period for the two B777 is ten years.
The B777 freighter aircraft has the capacity to haul 100 tons of cargo at a time. The catalogue price of the aircraft is 260 million tonnes. Boeing will deliver the four aircraft after three years.
With six freighter aircraft (two B757-200F, two B747s and two MD 11s), Ethiopian has the largest cargo fleet in Africa. In the 2010-2011 fiscal year, Ethiopian cargo traffic has grown by 20 percent to 160,000 tons when compared to the previous fiscal year. The growing horticulture and meat export have significantly contributed to the surge in cargo traffic.
Nick Fadugba, CEO of African Aviation Services Ltd, said that Ethiopian is a well-managed African airline even if it is state owned. “Ethiopian is a profitable airline that is known for renewing its fleet. And it knows how to negotiate with aircraft manufacturers and lessors. African airlines who want to buy and lease aircraft take a lesson from the management of Ethiopian,” Nick said.
Kassim told The Reporter that last March that the management of Ethiopian sent a request for loan proposals to 22 international financial institutions. Nine of the banks under three groups submitted proposals to Ethiopian. After long and thorough evaluations, the management selected the group led by ING. Kassim said the management informed the banks of its decision last week. Kassim declined to disclose the names of the other banks that participated in the bid. Representatives of ING were having a meeting with top Ethiopian management team this week at the headquarters of the airlines in Addis Ababa.The types of loans required by Ethiopian are Finance lease. EX-IM guaranteed loan, Pre-Delivery Payment (PDP) loan and Junior loan. The total amount is estimated to be around 1.45 billion dollars.
Ethiopian has secured a loan guarantee for the 15 aircraft purchase from the US Export Import Bank, EX-IM Bank.
The national flag carrier placed orders for 10 Dreamliners in 2005 valued at 1.5 billion dollars. Originally, deliveries were scheduled for 2008-2010, which Boeing failed to meet. Now Ethiopian expects to receive the first two Dreamliners next March. Ethiopian will be the first African airline to operate Dreamliner aircraft. Ethiopian has also ordered 10 B737-800, and 12 Airbus A350 XWB. Ethiopian is the first airline in sub-Saharan Africa to order Airbus a new extra wide body aircraft, scheduled to come out of airbus’s final assembly line in Toulouse in 2014.
The airline took deliveries of 5 B777-200LRs and eight Bombardier Q400 in less than two years. In the past year alone, the airline acquired 11 new aircraft. In November 2010, Ethiopian became the first African airline to own and operate the world’s longest-range airplane-B777-200LR. Last June TAAG Angola became the first African carrier to own and operate the Boeing 777-300ER. Boeing’s B777-200ER and B777-300ER Worldliner are two of the longest-range airplanes in the world.
Currently, Ethiopian operates a young fleet of 47 aircraft (39 jet, all of them being Boeing except two MD11 freighters and eight turboprops). According to AWAS, an Ireland-based leasing company, with 34 aircraft on its order book, Ethiopian has the largest aircraft order list in Africa to be followed by South African Airways and Royal Air Marroc each of which has 21 aircraft on order. Ethiopian’s rival, Kenya Airways, has 14 aircraft on order. SAA operates 55 aircraft, RAM 56 and KQ 31. The management of Ethiopian plans to increase the number of jet aircraft to 112 by 2025.
Ethiopian CEO Tewolde Gebremariam told The Reporter that since his airline has always been profitable, aircraft financing is not a problem. “If you are profitable and if you have a good credit history, securing a loan would not be a big problem. And we have both-clean balance sheet and commendable credit history.”
In a related news, the management of Ethiopian is negotiating to buy additional Bombardier aircraft. Tewolde told The Reporter that his management is in talks with executives of the Canadian air framer, Bombardier. Ethiopian has acquired eight Q 400s turboprops that it deployed in its domestic and regional routes. Currently, the management of Ethiopian is negotiating with executives of Bombardier for additional aircraft purchase. Representatives of Bombardier were in Addis Ababa this week. Ethiopian is also negotiating with Bombardier to buy the same aircraft for ASKY Airline, a new start-up airline based in Lome, Togo.
ASKY was established in 2009 by West African private investors. Ethiopian owns a 25 percent stake in ASKY. Ecobank, BIDC, BOAD, SAKHUMNOTHO Group Holding and other west and central private investors have shares on the new pan-African airline that serves 17 destinations in west and central Africa. Currently, ASKY operates three aircraft-2 Boeing 737-700 and one Bombardier Q400 - all leased from Ethiopian. Ethiopian has a five-year management contract with ASKY. The management of ASKY is now to buy Q-400 aircraft and Ethiopian is negotiating with Bombardier on behalf of ASKY.
At the 20th African Aviation Conference, Zemedeneh Nigatu, managing partner of Ernest & Young, said that the partnership forged by Ethiopian and ASKY was a perfect example of partnership among African carriers. “I strongly recommend partnership among different African airlines. An African airline investing in another African airline,” Zemedeneh said. “It has two advantages. First it will enable them to source more financing. Second it will put them in a better position in competing with carriers coming from other parts of the world.”
Tewolde said that more than 75 percent of the international passenger traffic in Africa is carried by non-African carriers, adding that the market share of African airlines is shrinking. “We should blame nobody else but ourselves,” Tewolde told participants of the conference. He attributed the problem (the increasing market share of non-African carriers) to the lack of cooperation among African nations in air transport.
In his keynote address, Ethiopian minister of transport Diriba Kuma said that non-African carriers were invading African skiess adding that they were weakening African airlines. “African states and airlines should cooperate and work together in developing air transport in Africa. If we don’t work together or we shall all perish together,” Deriba said. He warned that the African aviation industry may weather away unless African states enhance cooperation in developing the African airline industry.
African states are often criticised for failing to promote inter-Africa air traffic while opening their skies to foreign airlines.
In a related news, the management of Ethiopian is to phase out its three ageing Boeing 757-200 aircraft from its fleet in February next year. Kassim told The Reporter that the aircraft are already up for sale. “We are negotiating with potential buyers,” Kassim said.
Meanwhile, the management of Ethiopian signed a deal with Boeing for the purchase of four new B777 freighter aircraft. The jetliners will be delivered to Ethiopian after three years. The agreement was signed by Ethiopian CEO and representatives of Boeing at the headquarters of Ethiopian on September 2. The deal will be announced by the two parties soon.
The growing demand for cargo flight services prompted Ethiopian to place orders for the new B777 jetliners. Recently Ethiopian signed a lease agreement with GECAS for two B777 aircraft to be delivered in September 2012. The lease agreement period for the two B777 is ten years.
The B777 freighter aircraft has the capacity to haul 100 tons of cargo at a time. The catalogue price of the aircraft is 260 million tonnes. Boeing will deliver the four aircraft after three years.
With six freighter aircraft (two B757-200F, two B747s and two MD 11s), Ethiopian has the largest cargo fleet in Africa. In the 2010-2011 fiscal year, Ethiopian cargo traffic has grown by 20 percent to 160,000 tons when compared to the previous fiscal year. The growing horticulture and meat export have significantly contributed to the surge in cargo traffic.
Nick Fadugba, CEO of African Aviation Services Ltd, said that Ethiopian is a well-managed African airline even if it is state owned. “Ethiopian is a profitable airline that is known for renewing its fleet. And it knows how to negotiate with aircraft manufacturers and lessors. African airlines who want to buy and lease aircraft take a lesson from the management of Ethiopian,” Nick said.
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