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Aeropolitics, Airline Management, Airline Mergers & Acquisitions, Airline Restructuring, State Owned Airlines, UPDATES

Ethiopian Airlines (ET) is on a roll with is domination of the African skies as it takes equity positions in many new state owned airlines, the latest being tiny Eritrean Airlines (1 x ACMI leased B737-500), now that peace has come at least between the two neighbours. Ethiopian Airlines has for years had minority ownerships in ASky of Togo (40%) and Malawian Airlines (49%), but now it has gone on a binge of ownerships and partnerships from new national carrier start-ups and existing state carriers like Zambia Airways II (45%) to Guinea, Ghana, Chad, Mozambique, Equatorial Guinea, DRC and now possibly newly announced Nigeria Air. As Africa’s biggest and best managed airline (private and state owned) in Africa, ET is well positioned to dominate the continent with its equity and partnership ‘alliance’ strategy. Helping local airlines like Malawian Airlines (ex-Air Malawi) is very good, but when you start controlling a dozen plus airlines, it begins to be worrying, competition is being limited, and that is something Africa needs more of, not less. Now, new start-ups that plan to compete with Ethiopian, especially in long-haul, like Air Tanzania and Uganda Airlines and to a lesser degree for now, Senegal Airlines II face a mighty competitor that is going to pull traffic from all corners of Africa, N.A., Europe, Middle East and Asia with 100+ aircraft through Addis Ababa, and the small carriers will find it very hard to compete on costs, price, schedules, network to service. It is a very tough business to be entering today.

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Ethiopian Airlines confirms it is eying stake in Eritrean Airlines

 

Avitrader – July 20, 2018

 

 

 

Tomas’s Comment:

 

This peace between Ethiopia and Eritrea, (a country of 5.5 million people) is good news for sure, the first flight in years between Addis Ababa and Asmara has already taken place, peace is what the world needs, more of.

 

The national airline Eritrea Airlines is sadly a joke, and needs Ethiopian Airlines to fix the rag-tag airline that started flying in 2002 with a B767-300ER from Boeing, yes a little too big for the one airplane airline, and started flying from Asmara to Amsterdam.

 

Then in 2006 it downgraded to an A320, always a wet lease of course, in 2007 it did not know what it wanted and brought in a B757, then a DC-9 and then an MD-80, yes whatever was available and surely finding an operator who wanted to come to Eritrea was not easy, the routes then were Frankfurt, Milan, Nairobi and Rome.

 

In 2011 the airline shut down, under sanctions it was tough to get any operator to fly for Eritrean Airlines, but then it decided on Dubai and Karachi? and brought in 2 x A320’s.

 

In 2012 it was banned from flying to the EU, and most recently we have seen a A319 from Bulgaria (photo above), a B737-300 from Yan Air and now a B737-500 from Alexandria Airlines (Egypt), so fleet planning and aircraft types come and go really fast in this underfunded, poorly managed national airline, I suspect they do not pay their bills on time or at all, and desperate ACMI operators come and go oblivious to the previous numerous operators that have come and gone over the years flying for Eritrean Airlines.

 

Let’s not forget Eritrea is a one-party state, and its 1997 constitution – which provided for the existence of multi-party politics – has never been fully implemented. Military conscription is mandatory and indefinite, according to Amnesty International.

 

It is a brutal dictatorship, President Isaias Afwerki has governed Eritrea since it became an independent country in 1993.

 

His People’s Front for Democracy and Justice (PFDF) is the sole political party, like many African Presidents that stay too long, and destroy their nation in the meantime, from President Musevini (Uganda 1986), President Nguema Mbasogo (Equatorial Guinea 1979), President Guellah (Djibouti 1999), etc.

 

But we have seen the departures of President Zuma (RSA) and President Mugabe (Zimbabwe) so there is always hope for change.

 

Presidential elections planned for 1997 never took place and a constitution ratified in the same year has never been implemented. Mr Isaias has been criticised for failing to introduce democratic reforms.

 

Prolonged periods of conflict and severe drought have adversely affected Eritrea’s agriculture-based economy and it remains one of the poorest countries in Africa.

 

In a damning report into human rights abuses, the UN accused the government of crimes against humanity. By UN estimates, hundreds of thousands of Eritreans have fled the country in recent years, making the perilous journey across the Sahara and the Mediterranean to Europe

 

 

 

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In a remarkable political turnaround since Ethiopian Prime Minister Abiy Ahmed took office in February after the resignation of Hailemariam Desalegn, a generation of hostilities between Ethiopia and Eritrea and the long-running border war has come to an end. The result has seen the first commercial flight between the two countries for twenty years with two 90-minute flights between Addis Ababa in Ethiopia and Asmara in Eritrea.

 

On board the plane was Tewolde Gabremariam, CEO of Ethiopian Airlines. During his visit, he spoke with the CEO of Eritrean Airways, whose fleet currently comprises a leased Boeing 737. Having confirmed Ethiopian Airlines interest in taking a stake in the neighboring airline, the size of investment will depend on the results of fact-finding missions.

 

According to Gabremariam: “It is beyond opening routes. This one is different because politically, economically and socially, the flight we flew yesterday is going to make radical changes between the peoples of Ethiopia and Eritrea. It is a game changer,” adding that based on what he had already seen, Ethiopian Airlines will begin flying twice daily to Asmara.

 

Gabrremariam also stated that: “The demand is heavy not only because of Eritrea and Ethiopia but also demand from Eritreans living in Europe, America and so on who are eager to visit friends and relatives in Asmara.

 

“Connections were (previously) not smooth for them to come back home. They have (had) to go through Dubai or Istanbul and it is not convenient. Now they will have direct flights from the U.S., Canada and Europe.”

 

Ethiopian Airlines has been buying shares in other African airlines, a strategy aimed at gaining a competitive advantage against rivals such as the major Gulf carriers.

 

 

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About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 30+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (50+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems in the business for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com I write a lot of Articles and Posts on LinkedIN: https://www.linkedin.com/in/tomas-chlumecky-3200a021/

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