Today is the 52nd day since Ethiopia’s khat-addicted zombie dictator Meles Zenawi has disappeared from public view. His wife Azeb Mesfin, aka the mother of corruption, has disappeared for the past 22 days.
Meanwhile, the Woyanne junta is facing an economic collapse, as the regime’s foreign currency reserve has depleted. The Commercial Bank of Ethiopia took the drastic measure of stop issuing Letter of Credit to importers this week, as reported here.
Ethiopian’s profit plunges by 40 percent
The Reporter
August 11, 2012
The net profit of Ethiopian Airlines in the 2011/2012 fiscal year has tumbled by 40 percent to 732 million birr year-on-year. In the 2010/2011 fiscal year Ethiopian earned a net profit of 1.23 billion birr, which dropped by 500 million birr. In the 2011/2012 fiscal year, which ended on June 30, Ethiopian hauled 4.6 million passengers, a 25 percent surge in comparison to that of the previous year. The airline generated an operating revenue of 33.8 billion birr, up 37 percent. Operating expense increased by 35 percent to 5.7 billion birr. The airline made an operating profit of 1 billion birr and its net profit stood at 732 million birr.
Ethiopian said the unaudited figures for the fiscal year show that despite the challenges faced by the airline during the year, it finished the year in black with strong overall performance and is set to continue its growth to achieve goals set in its Vision 2025. At a press conference held yesterday Ethiopian CEO, Tewolde Gebremariam, said that the just ended fiscal year was the most challenging year.
“The fuel price hike was a daunting challenge. For the first time the price of fuel stayed high for a long time. It was above USD 120 per barrel for a year-and-half. The European economic crisis reduced the demand for air travel and the economic growth of China and other Asian countries stalled,” Tewolde told reporters at his office. “All these have affected the profitability of the global airline industry. As you have heard Kenya Airways has started laying off employees. And a number of major international airlines have registered loss. Despite all the challenges we are profitable. We made an annual salary increment of 6-8 percent.”
An official at Ethiopian told The Reporter that the 20 percent devaluation of the Ethiopian currency against the US dollar in September 2010 inflated the net profit the airline made in the 2010/2011 fiscal year. “One of the contributing factors for the surge in profit in that fiscal year was the devaluation. And it is unfair to compare the profit made in 2010/2011 to the 2011/2012 fiscal year,” the official said.
The airline introduced a six percent salary increment for employees earning a monthly salary of 4000 birr and above, seven percent for those who earn between 2000-4000 birr and six percent for those who earning 2000 birr and below. At an annual internal meeting with employees held on Wednesday at the African Union Assembly Hall the management of Ethiopian management briefed them about the challenges the airline faced during the fiscal year.
It was a tough year for the global airline industry. Last March IATA forecast that the global airline industry would make a profit of USD 3 billion. However, IATA said African airlines would lose a total of USD 100 million. South Africa Airways, which is currently in the red, is receiving subsidy from the government. Royal Air Marroc, the national flag carrier of Morocco, which declared bankruptcy, is laying of employees.
Tewolde said Ethiopian is in the third year of the Vision 2025 (a 15-year development strategy) adding that the airline is growing according to schedule. “We are growing at an annual rate of 25-30 percent. We are on the right track,” the CEO said.
He added that the airline plans to build a new cargo terminal and maintenance hangar.
Ethiopian has set up a second hub in West Africa in Togo where its affiliate airline ASKY is based. ASKY was established by the private sector in 2007 and became operational in 2009. Tewolde said that ASKY, which is in its third year of operation, has managed to achieve a rapid growth.
The CEO disclosed his management’s plan to establish two regional hubs in southern and central Africa. Under Vision 2025 Ethiopian anticipates to increase its fleet to 120 from the existing 47, the number of destination to 90, the volume of passengers to 80 million and its employees to 17,000.
Currently, the airline is expanding its aviation academy at a cost of 42 million dollars.
In what appears to be a nervous move by members of Ethiopia’s ruling party, Tigrai People’s Liberation Front (TPLF) and the well-connected elite in the wake of the disappearance of Ethiopian dictator Mekes Zenawi, big money is being transferred overseas. The situation is so bad that even the pro-TPLF journal, The Reporter, is forced to admit “capital flight”.
CBE suspends opening Letter of Credit
AUGUST 11, 2012 (The Reporter) — The Commercial Bank of Ethiopia (CBE) has suspended opening letters of credit (L/C) to businesses after the much-talked about three-month export foreign currency reportedly depleted in a one-year time or so. CBE, the largest buyer of foreign currency from the National Bank of Ethiopia (NBE) and the biggest generator of foreign currency from its international banking department and from remittances, suspended opening L/C for two to three months, according to sources from the bank.
The country’s largest bank currently opens L/C only for basic items such as petroleum and medicine, according to bank sources, while it is not now known when it will resume to provide the service for its customers and businesses.
Shortage of foreign currency has hit banks for a couple of months now, while the reason for the depletion has left private bankers in the dark, according to prominent bankers in the sector.
“The sad part is that we are notified the there is shortage of foreign reserve unprecedentedly,” said a banker who opted to remain anonymous. “The situation should have been known and disclosed earlier before it became critical. And it is very difficult to identify how the shortage was created, except for guessing or setting possible scenarios. There are bankers who say the problem has got to do with capital flight, both formal and informal. Yet while the informal capital flight has got to do with over invoicing and under invoicing, it will not have an effect on the country’s foreign reserve. But the formal does.”
Sources assert that there is a tendency for the reserve in forex offices to make their way or shift to the black market, which involves a huge volume of transaction.
Some also claim that NBE’s control over foreign currency reserve and transactions is not as stringent as other regulations the governing bank imposes on commercial banks.
The shortage of foreign currency has also made the come-back of the long and overdue queue at private commercial banks seen three years ago when the foreign reserve reached an alarming low in less than one year’s export.
The daily foreign currency auction between NBE and the commercial banks came to a halt for a month now.
Abebe Bikila the barefoot runner
BBC
At the 1960 Olympics in Rome an Ethiopian athlete stunned the world.
He was the first black African to win an Olympic gold medal and he did it without wearing shoes.
Click here to listen
