Ethiopian Airlines Close to Deal to Order Airbus A220 Planes
Bloomberg John Bowker,Bloomberg 5 hours ago
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(Bloomberg) — Ethiopian Airlines Group is close to agreeing a deal with Airbus SE for as many as 20 narrow-body A220 planes worth more than $1.6 billion, reviving an earlier plan after a spell using larger Boeing Co. 737s.
Africa’s biggest and most consistently profitable carrier is in late-stage talks about the purchase of the 100-seater aircraft, which should be completed by the end of the year, Chief Executive Officer Tewolde GebreMariam said in an interview at the state-owned airline’s head office in Addis Ababa.
The move would be a reversal of a decision last year to try flying larger planes to cities including Windhoek in Namibia and the Botswana capital Gaborone. To fill those jets, Ethiopian had to stop off at a second destination such as Victoria Falls on the way, the CEO said. Using A220s will make direct flights viable.
“It’s a good airplane — we have been studying it long enough,” Tewolde said on Thursday. With a range of five hours the jet is particularly suited to smaller markets that are relatively distant, he said.
The A220 was formerly known as the Bombardier Inc. C Series before being taken over by Airbus. Ethiopian could buy between 10 and 20 planes, the CEO said. The A220-100 model costs $81 million each, according to 2018 list prices.
Crash Aftermath
The order would be Ethiopian’s first since the crash in March of a Boeing 737 Max outside Addis Ababa, which killed 157 people.
Tewolde reiterated that the carrier would be the last to resume flights of the currently grounded model, which is nearing a vital test with the U.S. Federal Aviation Administration. Ethiopian has 28 Max aircraft on order, alongside other Airbus, Boeing and turboprop models, according to the company’s website.
“It’s only natural for us to be the last one to decide on the Max,” the CEO said. “If we’re convinced the problems are fully addressed, and that the re-certification is done in a collaborative manner with all regulators, then we will take the time, effort and energy to convince our pilots, crew and passengers that the aircraft is safe to get back in the air.”
Another major issue is the difficulty of getting cash out of various African countries where foreign-exchange is in short supply. Ethiopian has almost $100 million stuck in Angola, Sudan, Zimbabwe and Eritrea, Tewolde said.
Still, Ethiopian would not consider giving up on those markets, as it wants to maintain it’s role as a pan-African carrier serving the whole continent.
“Other airlines will have stopped, but we want to be there for a long time,” Tewolde said. “We have to find ways and means of continuing the operation.”
Ethiopian is a rare success story among African carriers, with its two main rivals — Kenya Airways and South African Airways — struggling with losses and relying on government support. The company had net income of $189 million in the year through June, the CEO said.
–With assistance from Nizar Manek.
To contact the reporter on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net
