Ethiopian Airlines, Africa’s most profitable carrier, this week marked the first anniversary of the crash of the Boeing 737 Max Flight 302 that killed 157 passengers and crew. Families of the victims planted trees and unveiled a memorial monument inside the headquarters of Ethiopian Pilots Association.
But after barely seeming to recover from the devastation wreaked by that tragedy the airline, like many around the world, is facing another existential challenge with the impact of the global coronavirus outbreak.
It faces this even while coping with an ongoing bitter conflict with its workers union and being forced to look inward for savings and cost reduction in anticipation of an ever-dwindling pool of travelers that is also experienced by other airlines.
And it’s not just passengers, even cargo flights to China and Hong Kong have seen a decline by 28%, reduced to 20 regular flights a week from 28, according to the Ethiopian Custom Commission.
Earlier this month, chief executive Tewolde Gebremariam told a gathering at the fifth Africa Aviation conference held in Addis Ababa on how ridership has been reduced by 20%, adding to the $40 million in lost revenue that the collective African aviation sector is facing. But as the global coronavirus crisis seems to worsen everyday, that early estimate may prove to be optimistic.
Over the last decade Ethiopian Airlines has gone from strength to strength, building itself into Africa’s primary airline and making Addis Ababa the key hub for the entire continent, overtaking Dubai in the process. The worry now is, in the middle of the severe downturn the global air industry faces Ethiopian might become a victim of its own success.
In particular, Ethiopian had made a big bet on developing the leading gateway corridor between the African continent and China helping to enable bilateral trade worth $208 billion.
As perhaps an insight into China’s overwhelming influence on Ethiopia’s developmental ambitions, the airline, owned by the government of Ethiopia has continued to fly to and from China despite calls to suspend its services to help curb the fast-moving virus.
Amidst rising criticism of Ethiopian Airlines’ continued flights to China, the airline cut down its February weekly flights from Addis to Beijing, Chengdu, Guanzhou and Shanghai by 33%. It has also changed its aircrafts on the Addis to Beijing, Guangzhou and Shanghai routes from Boeing 777 and A350 to Boeing 787-8 resulting in a 20%-45% change in capacity on the different flights.
But even without the obvious health concerns, Ethiopian Airlines’s commitment to China travel might take a hit simply because flights between China and Africa could take longer than other regions to recover as the Asian giant’s economy takes time to get back on track and Chinese businesses focus more at home in the short to medium term.
“The global airline industry is facing its biggest crises in decades. It will be significantly worse than the impact of 9/11. In Washington, the US government is considering financial subsidy to American carriers. In Africa, the airline industry was struggling even before the Coronavirus crisis”, says Zemedeneh Negatu, a veteran strategic advisor to some of the leading African airlines, including Ethiopian. “Virtually all airlines in Sub-Saharan Africa are already bankrupt including South African Airways and Kenya Airways”.
The International Air Transport Association’s (IATA) assess the impact of the coronavirus to upwards of $113 billion.
According to the Union, the management, led by Tewolde suspended the chair of the labour union and dismissed two pilots because of their union activism. It also allegedly tried to ban the union from recruiting members, while intimidating staff members from joining on calls on a collective agreement on pay and others.
The prime minister is now said to mediate the conflicts between management and the union.
Ahmed Kellow, the former CEO of Ethiopian Airlines has a warning on the happening of the airline, a Star Alliance Member and suggests it may need to reduce some travels.
“Ethiopian Airlines is yet to face more challenges as it travels to many destinations, in Africa and beyond”, he says. “The virus itself can potentially be prevented or reduced by reducing travels to some nations as the biggest impact of the virus is going to be on aviation companies”.
“Left unchecked, there is a chance the airline would be forced to lay off employees, even might be forced to either rent or sell its aircrafts”.
Sign up to the Quartz Africa Weekly Brief here for news and analysis on African business, tech and innovation in your inbox