aviation

The aviation juggernaut that Tewolde built in Addis

March 28, 2022

Africa’s largest airline, Ethiopian Airlines (ET), is expected to maintain its growth momentum despite the abrupt change in leadership after the exit of long-serving chief executive Tewolde Gebremariam and subsequent appointment of Mesfin Tasew Bekele to take over its stewardship.

The announcement of Mr Tewolde’s retirement as group chief executive early this week was unexpected. During his tenure, the airline grew its fleet and global reach and entered an era of profitability.

It was during Mr Tewolde’s leadership that Ethiopian took over from Emirates as the biggest connector between Asia and Africa, as well as within Africa. The carrier became Africa’s top airline in both passenger volumes and fleet size during his 11 years at the helm.

Mr Tewolde’s predecessor and incumbent board chair Girma Wake said the request for early retirement due to “health issues” had been approved by the board. The board announced the appointment of Mr Mesfin as Mr Tewolde’s replacement effective March 23.

Industry players familiar with the carrier’s operations say the change of guard represents minimal risk, and is unlikely to slow ET’s progress.

“Although I don’t know his successor personally, Ethiopian has always had a solid succession plan, backed by a long pipeline of talent,” said Ugandan air transport veteran Fred Obbo.

A veteran of 38 years at Ethiopian, Mr Mesfin’s holds a master’s degree in Business Administration from Open University in the UK, and an MSc in Electrical Engineering from Addis Ababa University. His experience at the airline spans key departments, including management and operations, aircraft maintenance and engineering, procurement, information technology, flight operations and corporate strategy, and leadership.

Mr Wake said he is fully “confident” in the new GCEO’s abilities.

“We believe that Mr Mesfin will lead the airline to even greater success, keeping it on the right track that will see it grow through many generations to come,” he said.

Mr Mesfin said his new role at Ethiopian Airlines, “which I have been serving for nearly four decades in various positions, gives me the opportunity to carry on with the fast and profitable growth of our beloved airline and take it to the next level”.

According to industry sources, Mr Mesfin has been part of the airline’s inner circle and was responsible for planning and execution of strategy. He led the airline’s automation project and fleet development.

He was the chief operating officer from 2010 to 2021, and, since last year, had been the CEO of Asky Airlines, Ethiopian’s Togo-based Central and Western Africa subsidiary. He was previously vice-president for maintenance and engineering, chief information officer, avionics engineer and supervisor of the avionics engineering group, among other positions.

“I think he represents tradition because Ethiopian has never hired leadership from outside of the country. At some point they would nominate generals from the armed forces to fill key roles, but never expatriates,” Mr Obbo said.

Mr Mesfin’s immediate task will be to steer the airline through the uncertainties of change. He will also lead the induction of 41 aircraft that are on order, taking Ethiopian’s fleet to 175 aeroplanes. The airline had planned to have a fleet of more than 200 aircraft by 2030.

Mr Tewolde grew Ethiopian’s fleet from 33 at the time of his takeover in 2012, to the current 134. Early this month, he announced the signing of a memorandum with Boeing, with whom ET has had a longstanding partnership, for the supply of 777-8 Freighters.

Under the deal, the New York Stock Exchange-listed aerospace company will supply five 777-8 Freighters, the industry’s’ newest aircraft said to be the most fuel-efficient twin-engine. Mr Tewolde said the agreement would help ET meet its expanding global cargo demand from its hub in Addis Ababa and position it for long-term sustainable growth.

'Consistent with our history of aviation technology leadership in Africa, we are pleased to sign this memorandum of understanding with our longstanding partner Boeing, which will make us join a select group of launch customer airlines for the fleet,” he said. “In our Vision 2035, we are planning to expand our cargo and logistics business to be one of the largest global multimodal logistics provider on all continents. To this effect, we are increasing our dedicated freighter fleet with the latest technology, fuel efficient and environment-friendly airplanes of the 21st century.”

The airline’s revenues have maintained high profits during the better part of Mr Tewolde’s tenure.

The airline defied the Covid-19 storm to post a six percent growth in net profit from $133.4 million in 2019 to $140.93 million in 2020, according to the annual report for the 2019/2020 financial year.

Its operating revenues increased by six percent from $2.2 billion to $2.34 billion, and operating expenses went up by one percent to $2.07 billion from $2.05 billion during that year.

The airlines’ borrowing rose by 25 percent to $63.35 million from $50.48 million, and its working capital dropped from negative $147.17 million to negative $408 million.

ET’s total assets rose by 61 percent from $4.47 billion to $7.21 billion, in the period under review. According to the African Airlines Association (Afraa) 2021 annual report, the continent’s airlines posted a cumulative loss of $2 billion in 2020 due to the Covid-19 pandemic.

In 2021, African airlines lost $8.5 billion, 49 percent of 2019’s revenues.

ET’s cargo services cover more than 120 international destinations around the world, with both belly-hold capacity and dedicated freighter services.

Meanwhile, the airline has started the construction of the largest e-commerce hub in Africa with the newly acquired 777-8 Freighters set to be instrumental in the growth plan.

Ethiopian Airlines currently operates nine 777 Freighters, connecting Africa with more than 40 cargo centres throughout Asia, Europe, the Middle East and the Americas. The carrier's fleet also includes three 737-800 Boeing Converted Freighters and a combined commercial fleet of more than 80 Boeing jets including 737s, 767s, 787s and 777s.

Mr Tewolde grew capacity from 8.3 million seats in 2012 to 14.8 million last year, after a dip to 11.8 million in 2020. The airline’s extensive reach, flying to 114 destinations from its hub in Addis Ababa. This is down from the 143 destinations served in 2019, but nearly double the 75 destinations at Mr Tewolde’s first anniversary as CEO in January 2012.

Ethiopian Airlines has a presence in six African countries through a management role or strategic partnership with the local carriers, seeking to revive their ailing national carriers.

Before his retirement, Mr Tewolde had announced the airline’s plans to restart operations with Ethiopian Mozambique Airlines after terminating the service in May on the back of the Covid-19 pandemic impact on aviation. Besides the Asky in Togo, ET also has an interest in Malawian Airlines and Chad-based Tchadia Airlines, and has a management contract with Ceiba Intercontinental in Equatorial Guinea.

ET plans to set up an airline in Nigeria, and has signed an interline agreement with Johannesburg-based Airlink, which allows passengers to have seamless travel on a single ticket on any of the two carriers’ networks.

theeastafrican



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