Assessing Ethiopian Airlines' Future

Ethiopian Airlines is the focus of attention for a somber reason—the crash of one of its airplanes. But there’s one aspect of the tragedy that underscores its relevance as an intercontinental airline of growing importance: the victims of the crash hailed from more than 30 different countries.

Ten years ago, Ethiopian was already attracting welcome attention as an up-and-coming airline. Indeed, an Airline Weekly cover story from February 2009, highlighted its well-positioned Addis Ababa hub, its ambitious growth plans and its country’s double-digit annual economic growth from 2002-2007. The state-owned carrier had 22 mainline planes at the time. Four years later, when Airline Weekly published an interview with Ethiopian’s CEO then and now, Tewolde GebreMariam, the carrier was growing revenues at a blistering 20% annually, taking advantage of a surge in investment in Africa¬—most importantly from China. Last year, in another follow-up on the Ethiopian Airlines story, Airline Weekly chronicled the milestone of its 100th aircraft delivery.

It’s time again to revisit the story, not because of the terrible fate of Flight 302, nor the resulting uncertainty about Boeing’s B737-MAX, which Ethiopian still has many on order. Commercially, Ethiopian quickly recovered from a fatal 2010 crash near Beirut. It likewise saw negligible commercial impact from lengthy delays in receiving its B787s—one of its own was damaged by fire while parked at London Heathrow. What more profoundly merits a revisit, with respect to the longterm prospects of the airline, is a sudden slowdown in its growth trajectory, evident before the crash.

This quarter, according to Diio Mi schedule data, Ethiopian will have grown its ASK capacity 9% y/y, followed by 6% growth next quarter. That marks just its second time all decade with two consecutive quarters of growth below 10%—the other time was during the first half of 2015. In 2018, the expansion was raging as hot as ever, with ASKs up 19%. New routes last year included Buenos Aires, Chicago, Jakarta, Manchester, Barcelona, Moscow, Geneva and Brussels, in many cases served via stopover in another city (i.e. Jakarta flights operate from Addis via Bangkok).

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