By BOSCO HITIMANA | BusinessWeek
KIGALI, RWANDA — Rwandair and Ethiopian Airlines have entered into a code share agreement to boost their visibility.
Under two national flag carriers’partnership, Rwandair will serve as the marketing carrier while Ethiopian Airlines will be the operating carrier.
Ethiopian Airlines Vice President Commercial, Mr. Tadesse Adane and Rwandair Chairman, Mr. Gerald Zirimwabagabo recently signed the agreement in Kigali, Rwanda.
“This is a major milestone in the development of Rwandair and the airline industry in our country,” Zirimwabagabo said after signing.
He said the small airline is looking for partnerships that will allow its clients fly beyond its destinations.
The Ethiopian carrier, according to Tadesse, seeks partners to develop and increase its market share in southern Africa, particularly the Rwandan market.
Tadesse said the airline has embarked on helping African small airlines to be competitive and boost the African airline industry. He said currently the carrier flies daily to and from Kigali and that he hopes the new partnership will ‘greatly’ double the flights.
The two airlines are incomparable in both resources and market share but the airlines’ bosses believe they will reap from the partnership.
Rwandair’s code share with Ethiopian Airlines came following similar partnerships with other major airlines including Brussels Airlines, and the USA- based Virgin Atlantic Airlines to boost its visibility.
The airline is also pursuing an ambitious plan to purchase two used CRJ aircraft from Lufthansa, a Germany based carrier, with ambitions to reposition in the regional aviation industry.
Currently Rwandair operates three aircraft on lease while Ethiopian Airlines commands 35 aircraft. Ethiopian Airlines has been crowned the African Airline of Year 2009.
By Eleni Zaude Gabre-Madhin
Many Ethiopians have been intrigued by the advent of the Ethiopia Commodity Exchange and many voices have been heard from around the world in our virtual cyber-community and in private communication, some encouraging, some thrilled, some questioning, some skeptical, some downright opposed. I would like to thank all of those who have taken the time to express their interest, whatever their viewpoint. Open dialogue on important ideas, in a mutually respectful manner, is vital to our ability to grow and evolve as a society and as an economy. As we proceed in our dialogue, I trust that those who organize these forums will enforce the necessary standards of courtesy worthy of our age-old civilization.
To quote Victor Hugo, “there is nothing so powerful as an idea whose time has come.” In response to the many thoughtful and sometimes provocative questions that have been raised, I would like to take this opportunity to share with you why we believe that the Ethiopia Commodity Exchange is an idea whose time has come. Here in Ethiopia, over the past two years, we have continuously held open discussions with our stakeholders, in numerous events, engaging with thousands of private market participants from farmers to traders to processors to exporters, from all sides of the market, as well as others. Given the recent interest by those in the Ethiopian Diaspora, we are happy to take the time to respond to concerns raised and to clear up the misinformation and misunderstanding that seem to currently prevail among some. We do so out of respect for our fellow Ethiopians and because we believe that all deserve to get the facts about this important initiative in our country. This is probably a good time to make the appropriate disclaimer that the views presented here are my views and, where relevant, those of the Exchange, and do not represent the government of Ethiopia, any other institution, or any political party. In this essay, I will focus on the core questions related to the need for the Exchange, its ownership and possible control by government, and whether it is a free market or a monopoly. For those who might not appreciate the technical detail provided, please skip to the end where I summarize the key points. For the rest, buckle up and enjoy the ride.
I start with addressing why ECX is needed to begin with, and why we believe it can fulfill its vision of “transforming the Ethiopian economy by becoming a global commodity market of choice.” Like most countries in early stages of development, Ethiopia depends on agriculture as the backbone of its economy. To get out of agriculture and transform into a modern industrial state, Ethiopian agriculture must become increasingly productive so that labor can shift into other sectors. Greater productivity comes through investing more capital into production, through investing in productivity-enhancing technology, such as fertilizer, seeds, better farming tools, mechanization, etc. This investment can only happen if it is profitable. Profitability depends on whether there is a market where the product can be sold reliably and efficiently. Understandably, farmers hate risk. In addition to weather and production risks due to pests, crop disease, and other vagaries of nature, farmers also face the risk that there is no buyer, that they can’t access the market or it is too costly to do so, that prices are unknown or will drop, or that they won’t get paid. These very real market risks and costs prevent them from making the investments they need to make to be more productive. So they are stuck in a vicious cycle, producing at low yields, mostly for themselves, which is why only 25% of total agricultural production reaches the market. Farmers are not the only people whose livelihood is constrained by the market. If they are unable to get the supply of raw commodity delivered to them when they need it or prices fluctuate or the quality is unreliable, industrial processors, such as flour factories or biscuit or oil manufacturers, routinely incur higher costs because they are unable to utilize their machinery at full capacity and are thus discouraged from expanding their production. Similarly, commodity exporters who have contracted with international buyers face the terrible risk of not being able to make their shipment on time if they are unable to get the supply in time or in the right quality. To avoid this risk, they often are forced to tie up their capital holding large inventories, which means they can’t readily expand their business. So there is a real market problem, and it is faced by many actors on all sides of the market. And this problem constrains our economic growth. How does ECX provide a solution? ECX is a neutral third party, providing service to the market in four major ways. First, ECX certifies the quality of the commodity to be sold and holds it in warehouse on behalf of the seller, thus guaranteeing the quality, quantity, and delivery of the commodity to the buyer of that commodity. This solves the problem faced by buyers such as exporters and processors. Second, ECX operates a payment clearing and settlement system which takes payment from the buyer and transfers it to the seller, guaranteeing that the payment will be made in the correct amount and on time. This solves the problem faced by sellers, such as farmers and traders. Third, ECX provides a trading system which enables buyers and sellers to find each other when they need to trade. This trading system is for now a physical Trading Floor where bids and offers are made in person by buyers and sellers (or their agents) but will also have an electronic trading platform which can be accessed remotely. Finally, ECX disseminates information on prices as soon as trades are made to everyone in the market so that no one is at a disadvantage because they are missing market information. This price transparency helps everyone to plan their commercial actions better and thus make better deals. Having a reliable market system helps farmers produce more, expands our industrial base, increases our exports, and enhances our food security because commodities reach the areas where they are most needed faster and at lower cost. That is why commodity exchanges are part and parcel of most advanced and more recently emerging economies around the globe, starting with the best known US commodity exchange, the Chicago Board of Trade, started in 1848 for precisely the same reasons why our farmers and others in Ethiopia and our economy as a whole would benefit from an organized market.
I would now like to address a set of related questions: Who should own the exchange? If the government of Ethiopia owns it, how can it be considered a free market? Is it a monopoly and/or an instrument of control? These are all valid questions and have been asked many times by our stakeholders here in Ethiopia. Let us start with ownership. The historical experience is that exchanges in Western countries were set up by private actors as “mutual organizations” on a non-profit basis, meaning that a group of merchants got together and set up this third party marketing system which sustained itself from fees charged to its mutual owners, or members, at zero profit. Even though the exchange itself was non-profit, the members who owned the exchange on the other hand privately benefited from the system by restricting entry into the mutual organization and charging for-profit brokerage fees to non-members to use the exchange trading system, thus becoming very profitable, large brokerage firms such as Charles Schwab, Merrill Lynch or others. Over time, this system of mutual ownership become problematic because of the inherent conflict of interest in that the owners who were also members tended to put their private interest ahead of the market’s interests. So, traditional exchanges in most of the Western countries and newly established exchanges in the emerging markets have in the last decade evolved to “demutualized” entities, meaning that the owners are separate from the trading members. In the US, this has meant that most of the exchanges have gone public, meaning that they have sold shares to many individuals, who are not members of the trade. In places like India, exchanges have been recently set up owned by a few investors, such as banks or insurance companies (half state owned and half private), again who are not trading members. However, if there are investors or shareholders, it implies that the exchanges no longer have a non-profit orientation, meaning that they charge fees intending to maximize profit, rather than at cost. In the case of Ethiopia, having reviewed these various global experiences, we chose a unique “hybrid” model. Our model adopts the demutualized entity status in keeping with global trends, but retains the traditional system of membership and the non-profit status of the exchange, in order for it to attract maximum participation and not to impose a financial burden on the market users. In effect, this is a Private-Public partnership model in that, as a non-profit, it would only make sense for the state to sponsor the investment since no private actor would be willing to invest large sums on a non-profit basis. At the same time, there is private ownership of a restricted number of permanent and freely tradable membership seats (like shares) which gives incentive to private members to profit from using the exchange system and from charging brokerage fees to non-members. This model essentially marries the social objectives of creating an organized market with private profit incentives. By law, and unlike any other publicly owned enterprise in Ethiopia, our Exchange operates on an at-cost basis and does not pay dividends to the government Treasury and may only re-invest any net earnings into its own scaling up. Initially, in fact, the Exchange is operating at a loss since it charges fees somewhat below cost, in order to encourage participation. Thus, there is no motive to retain ownership by the state and over time, as the Exchange system takes hold, the government has publicly expressed its commitment to passing ownership to private entities. This model is not entirely without precedent. In the US, Government Sponsored Enterprises (GSEs) in the financial sector, the most well known of which are Fannie Mae and Freddie Mac corporations which operate multi-trillion dollar markets for home mortgages, were set up under state ownership in 1938 and later went into private shareholding in 1968. Their recent bailout, along with other financial institutions, by the US government following the 2008 financial crisis has restored ownership back to the US government. Many stock exchanges in emerging markets, such as Dubai, Tel-Aviv, Eastern Europe, and others, are established with government ownership, usually for the same reasons as Ethiopia, that the investment costs are too high to encourage private investment and because the exchange is desired for social objectives, as a benefit to the economy. I should mention that the start-up cost of our Exchange is in the order of US$ 24 million which, because of its public ownership and non-profit nature, was able to be financed by donor partners such as the USAID, World Bank, UNDP, WFP, Canada, and others.
And now, for what really matters, what about control? To begin, it is important to understand that, although government-owned, the Exchange is not a part of government. It is not an agency or department of any particular state organ. It is established, by law, as an autonomous commercial enterprise having its own legal status. A parallel example might be Ethiopian Airlines, although the corporate governance of the Exchange is unique. Our establishing law extends the concept of demutualization further to separating ownership, membership, and management. Thus, by law, the Exchange is managed by professionals that cannot be appointed from within government or come from the trading community. The Exchange has its own salary structure and its employees are not part of the civil service. In fact, at present, the Exchange has an internationally recruited management team of 10 professionals, financed by external donors, as a management on loan program, to ensure that the Exchange is run professionally and to transfer needed skills. Again, unlike any other publicly-owned enterprise in Ethiopia, the Board of Directors is composed in almost equal part of representatives of the owner (state) and the private members of the Exchange as well as the CEO as a non-voting director. The Exchange’s CEO is appointed by and reports to this Board of Directors. Thus, without any doubt in the law or in practice, the Exchange is managed independently of any government organ and is a serviceproviding entity to the private market actors. There is no interference or intervention in any aspect of day to day ECX operations, whether it is the warehousing and quality inspection, the dissemination of price information nationally and internationally (which relies mainly on the systems that ECX itself has developed), the financial systems, or the trading sessions. One could say, and many of our private sector members have quickly realized once it was explained, that the ownership-membershipgovernance model described above essentially gives a free pass to our private members, who can gain private profit from the exchange at minimal cost, without investing in the expensive assets, and still have a big say in the management of the entity.
At the same time, like in any country, no market can exist in a vacuum outside the reach of policy or the laws of the land. Thus, our Exchange regularly consults with appropriate line Ministries on the direction of policies, regarding changes to domestic or external trade policies, tax, or macro policies. This is no different than in South Africa, the US, India or elsewhere. For example, in 2008, when domestic inflation got out of hand, the Indian government banned rice and wheat trading on the Exchange and imposed an export ban. This has nothing to do with who owns their exchanges (in fact it is a combination of public and private investors). Similarly, the US has recently initiated a crackdown on excessive speculation in the commodity markets (oil) and imprisoned or fined several market actors such as Bernie Madoff who violated laws in the financial market. In addition to the laws and policies that govern a market in any country, all exchanges also have their own internal Rules that govern how the market is organized and how the market actors must behave. The Rule books of the Chicago and New York commodity exchanges are thick volumes with thousands of pages developed over 160 years with detailed instructions on how to govern their market. We also have our Rules of the Exchange that, like in the US, Argentina, Brazil, India or elsewhere, have to be approved by our regulatory body, the newly established Commodity Exchange Authority. This Authority is a government body which has the mandate of overseeing that our Exchange itself and our Members are in compliance with our law and with the other laws of the country and with our Rules. Having been set up alongside our Exchange, the Authority has been in active partnership to build its capacity through training with the US Commodity Futures Trading Commission, on which it is modeled. In any country with a serious market, government regulators like SEC and CFTC in the US, or FMC and SEBI in India, have a significant and constant presence. So a market is not a free market because it is operates outside of laws or rules. It is in fact the presence of these laws and rules that ensures that the integrity of the free market, or the principle of market competition, is maintained. For example, one of our rules regarding our Trading Floor is that all prices must be shouted out audibly so that all market actors can hear the bid or offer. This is a rule designed to ensure that everyone has a fair chance to compete for that trade.
So what makes a free market? It is, within the confines of the existing rules and laws in place, the absence of interference by any third party in the actual buying and selling of any good. In a free market, as long as the rules are followed, any seller can sell whatever they want to any buyer at any price, any time, and in any amount, and vice versa. Let us think of a free market like driving on a highway. As long as you have a driver’s license, a registered and insured vehicle, and follow the traffic rules, you can drive in any car you want, anywhere you want, with whomever you like, for as long as you like (gas permitting, of course). The rules are there to ensure that everyone is safe on the highway. In our Exchange market, this is precisely the case today. Our 450 mostly private trading members freely trade at prices and quantities and with whom they like without any interference whatsoever.
Finally, what about a monopoly? Why force all coffee or all sesame trading into the Exchange? Why not let people choose to use the Exchange of their own free will? To extend our above analogy, we might say that this is like forcing all drivers onto a single highway. At first glance, this seems quite unpalatable and rather contrary to the notion of a free market. Here is the catch. Among the four functions of the Exchange that were listed above, its very core role is to provide a central trading system for buyers and sellers to match their trades. This trading system results in what is known as “price discovery” which is the emergence of the competitively bid market price that reflects true supply and demand of a good at a particular moment. However, to be a truly representative market price, the trading system needs a critical mass of sellers and buyers, otherwise the Exchange’s price is meaningless as an indicator of market supply and demand. In other words, if the ECX price represents only a small share of the actual market trading, then this price is not the true market price. For this reason, all of the world’s exchanges essentially force this critical mass of trading in a commodity or stock into a single trading system. That is why there are only two major stock exchanges (NASDAQ and the New York Stock Exchange) for the entire U.S. economy and most companies are only listed on one of these exchanges. Similarly, for commodities, although there are about 4 active commodity exchanges in the US, each commodity is traded exclusively on only one exchange. For example, Hard Red Spring Wheat is only traded on the Minneapolis Grain Exchange and Soft Winter Wheat is only traded on the Chicago Board of Trade, and so on. By the way, the term “monopoly” is not the correct use of the term in this case since monopoly implies a single buyer or a single seller that sets prices non-competitively and, here, we have hundreds of buyers and sellers freely trading competitively at their own prices. We would hardly say the Chicago Mercantile Exchange has a monopoly on corn trading, no more than we would consider that the CEO of Fannie Mae is part of the US government. So, more appropriately, it can be said that our exchange, like other exchanges elsewhere, is an exclusive platform for trading in particular commodity contracts. Over time, as the market volume and liquidity grow, it might be appropriate to have more than one commodity exchange and our law provides for the Ethiopian regulatory body to recognize other exchanges.
IN SUM, here are the key points. A better functioning market is good for everyone and for the economy, from farmers to domestic traders to processors to exporters and an exchange is a tried and true model to deliver a better market. Though state owned, ECX is an autonomous (non-government) commercial entity set up on a non-profit basis, with private ownership of membership seats, which thus represents a Private-Public partnership model in which private seat owners are able to gain profit from using the exchange system at minimal cost. Our corporate governance structure ensures that ECX is managed independently and professionally with a Board of Directors representing nearly equally both the owner and the private trading members and a separation by law of management from ownership and membership. At the same time, the Exchange operates within the policies and laws of the country, like any exchange in the world. Within these rules and policies, there is no interference by the state in the operational management of the exchange or in the day to day trading by market actors. Finally, ECX cannot be considered a monopoly in the correct sense of the word but rather an exclusive trading place for specific commodities, in order to have a critical mass of buyers and sellers, in keeping with the way exchanges are set up around the globe.
In subsequent essays over the coming days, I will address the human side of ECX, the lives that have been touched and who is really benefitting, particularly among small farmers, and the very important issue of coffee trading and the concern on specialty coffee, as well as our first year performance and the exciting plans ahead as we embark on our second year. Some of these themes are also addressed on our website, www.ecx.com.et, where you can also find our establishing law. Some have questioned why invest the time to engage in this dialogue. It is because we believe that a national institution such as ours must be accountable and transparent to all Ethiopians, wherever they are. Public education is part of our job. We also believe that, through bringing knowledge or investment, anyone can meaningfully engage with ECX. After all, it is your Exchange too.
(Dr Eleni Zaude Gabre-Madhin is Chief Executive Officer of the Ethiopia Commodity Exchange)
Colonel Kassaye Kifle has passed away on July 14, 2009, after receiving medical treatment at St. Thomas Hospital in Nashville, Tennessee.
Friends and family held a memorial service for him at the Debre Keranio Medhanialem Church in Nashville on July 17.
His funeral services will be held at the Debre Libanos Monastery in Ethiopia on July 25, 2009.
Many who had served as officers in the Ethiopian armed forces remember Col. Kassaye as a leader who served his country honorably.
Over during his career he was trained as an aviator in the United States, and aviation commander in the Soviet Union and the Ethiopian Air Force Command Staff College.
As a member of the Ethiopian Army Aviation Unit, he led Assault Helicopter Teams and received medals for bravery.
His contribution to Ethiopia continued as a pilot trainer at Ethiopian Airlines.
Col. Kassaye Kifle is survived by his wife, two children, and two grand children.
(Messages of condolence to the family can be sent to [email protected])
የኮሎኔል ካሣዬ ክፍሌ አጭር የህይወት ታሪክ
ኮሎኔል ካሣዬ ክፍሌ ከእናታቸው ከወይዘሮ ደመቀች አስፋውና ከአባታቸው ከአቶ ክፍሌ ደስታ እንደ ኢትዮጵያ አቆጣጠር በ 1935 ዓ∙ም∙ በአዲስ አበባ ከተማ ተወለዱ::
እድሜያቸው ለትምህርት ሲደርስ የ 1ኛና የ2ኛ ደረጃ ትምህርታቸውን በአዲስ አበባ ኮከበ ፅባህ ቀዳማዊ ኃይለ ሥላሴ ዩኒቨርስቲ ከገቡ በኋላ አገራቸውን ለማገልገል በፅኑ ወዳመኑበት ሀረር ጦር አካዳሚ በመግባት ከፍተኛ የውትድርና ትምህርት ቀስመዋል::
ኮሎኔል ካሣዬ ክፍሌ ከሀረር ጦር አካዳሚ ከተመረቁ በኋላ በአርሚ አቪዬሽንና በኢትዮጵያ አየር ኃይል በአውሮፕላን አብራሪነት ለረጅም አመታት አገልግለዋል::
ኮሎኔል ካሣዬ ክፍሌ በስራ ባልደረቦቻቸው ክብርና ከፍተኛ አድናቆትን ያተረፉ ከመሆናቸው ሌላ በሀገር ፍቅር ስሜታቸውና በቆራጥነታቸው እጅግ ተወዳጅ ነበሩ::
ኮሎኔል ካሣዬ ክፍሌ ከባለቤታቸው ከወይዘሮ ዘሪቱ ዘውገ በሰላምና በፍቅር ለ 27 ዓመታት በጋብቻ ፀንተው የኖሩ ሲሆን ሁለት ልጆች አፍርተዋል::
ኮሎኔል ካሣዬ ክፍሌ ባደረባቸው ፅኑ ህመም በህክምና ሲረዱ ከቆዩ በኋላ በናሽቪል ከተማ ሴንት ቶማስ ሆስፒታል እንደ ኢትዮጵያ አቆጣጠር ሐምሌ 7 ቀን 2001 ዓ∙ም∙ ከዚህ አለም በሞት ተለይተዋል:: አስከሬናቸው ወደ ውድ አገራቸው የተላከ ሲሆን በዛሬው እለት እንደ ኢትዮጵያ አቆጣጠር ሐምሌ 18 ቀን 2001 ዓ∙ም∙ የቀብር ስነስርዓታቸው በኢትዮጵያ የደብረ ሊባኖስ ገዳም ይፈፀማል::
ቸሩ ኣምላክ የኚህን ጀግና የኢትዮጵያ ልጅ ነብስ ከፃድቃን መካከል እንዲያኖራት የሁላችንም ፀሎት ነው::
ADDIS ABABA — Ethiopian Airlines has collected 45pc more revenue in the first eight months of the 2008-09 budget year than it has planned according to its officials.
The phenomenal performance has come during the global economic crisis that has put contributed to a loss of 8.5 billion dollars for the aviation industry in 2008 and an anticipated 4.7 billion dollars loss this year. The airline has registered 8.37 billion Br in revenue over eight months, three per cent higher than the 8.15 billion Br plan for the entire year.
Of the gross revenue, 6.12 billion Br was collected from ticket sales for about 1.95 million passengers. This represents 99pc of the planned passengers for the eight months.
Boosting operations with three additional aircraft to its fleet size in the current fiscal year, the flag carrier’s performance in the cargo service has also, equally, gone beyond the plan its executives authored for their operations through the year.
“To facilitate the country’s export sector, the airline has bought a cargo plane for $60 million and rented two passenger airplanes, a Boeing 757 and a Boeing 737-800.” Girma Wake, chief executive officer of the national carrier, said. He was reporting the performance of the Airline to the Infrastructure Affairs Standing Committee of the House of People’s Representative last Wednesday June 3, 2009.
Ethiopian has collected 1.33 billion Br in revenue from transporting 354 million tons of freight overseas. The revenue from the cargo is five per cent higher than the actual plan for the eight months.
It has also collected 850 million Br from payments for extra luggage, training and postage services. Previously, its plan was to collect 570 million Br from these sources.
Its expenditures over the same period were 7.64 billion; representing 96pc of expected expenses. This is a 45pc increase compared with the same period last year.
The increasing oil consumption due to increased operations accounts for 3.39 billion Br of the total expenditure. This represents 44.3pc of its total expense.
“We are astonished by the performance of the airline,” said a member of the Standing Committee as he asked the CEO of Ethiopian Airlines how they managed to achieve such a performance at a time many other airlines are closing or loosing money due to the global financial crisis.
“33 of the 53 flight destinations of the airline are in Africa which has not been hit hard by the financial crisis,” said the CEO.
Conference travellers have also contributed to the performance of the airlines, according to Girma.
“Unlike Ethiopian, many airlines have more leisure travellers who are tourists. Thus, when a crisis like the one besieging the world happens, travelling for leisure is likely to decline. Business travellers, however, have to travel,” the CEO said while explaining the questions raised by the MPs.
“The airline has increased flight frequencies to many of its destinations and a modern airport facility built by the Airports Enterprise increases travellers’ comfort,” Girma said.
Many airlines have faced challenges in continuing their services during the global economic downturn which has decreased business and leisure travel worldwide. Some governments such as the republic of South Africa and China have been forced to inject hundreds of millions of dollars to ensure their airlines are able to continue providing service.
South African Airways, one of the biggest airlines in Africa and one of only two Star Alliance members in Africa, received a 2.8 billion Rand (a little over 348 million dollars) injection from their government while China Southern is set to be the first mainland carrier in China to fly out of the financial turbulence after getting a capital injection of three billion Yuan (approximately 440 million dollars) from their government.
Hit by declining passenger traffic, China Southern lost over 4.8 billion Yuan (a little over 700 million dollars) in 2008.
Similarly British Airways reported 850 million dollars in losses over the same year.
The aviation industry experienced losses in 2008 due to the increasing price of oil. In July 2008, oil reached 147 dollars per barrel. The aviation industry lost 8.7 billion dollars. Now, with oil prices decreasing to their current price of approximately 66 dollars, the aviation industry still continues to suffer from losses. The CEO’s report also included speculation of industry experts that this year, the aggregate loss is will reach 4.7 billion dollars.
Despite a daunting global context where profitability has become rare, Ethiopian Airlines has managed to surpass its plans.
“We found the performance of Ethiopian Airlines impressive,” Wubneh Emiru, chairperson of the Infrastructure Affairs Standing Committee, told Fortune. “We cherish the achievements of the airline.”
But not surprising is the performance for experts in the industry.
“The achievements of Ethiopian are expected,” Zemedenen Negatu, managing partner of Ernst & Young, who has been consulting the airline since 2004, told Fortune.
He attributes the success of the airline to an efficient management system and the visionary leadership pursued by its management and board.
Nevertheless, its domestic operations seem to have enjoyed less attention. The CEO was asked to explain the contrast.
“It is a fair criticism,” Girma said.
But there are plans in the making to improve the domestic services.
“We have bought eight Bombardier Airplanes from Canada,” he said. “We will buy four or more planes from the same company next year.”
Ethiopian is also working to upgrade its pilot training institution at a cost of 30 million euro (45 million dollars) with financing through a loan from French Bank. With the finalization of the expansion, the training institution would be upgraded to an Aviation Academy, according to the CEO.
As part of its preparation for membership in the Star Alliance, it has also signed a code share agreement with Singapore, Thai and United airlines of Singapore, Thailand and United States, respectively.
It has also bought 25pc equity share in the establishment of ASKY airline in Togo in collaboration with the government of Togo and the Economic Community of West African States (ECOWAS), a regional block of 16 countries founded in 1975.
Ethiopian will be responsible for maintaining the air crafts and management of airline operations.
Togo will serve as the airline’s West African hub, according to the CEO, though Nigeria offers the largest number of passengers for Ethiopian in the continent.
– Addis Fortune