Ethiopian sees encouraging progress on long-term goals

Amsterdam
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Ethiopian Airlines chief executive Tewolde Gebremariam believes the expanding carrier's performance over the last two years demonstrates that its ambition to grow revenues to $10 billion by 2025 is achievable.

The Star Alliance carrier has set out the goal as part of wide-ranging growth plans in its Vision 2025 strategy, outlined in 2010.

Speaking at the recent Airline Business-organised World Air Forum in Amsterdam, Gebremariam said: "Two years already into this vision we have seen an average of 25% growth, so that is giving us confidence that it is realistic because we are already achieving that in the last two years."

The carrier grew revenue by 37% to $1.9 billion, generating a profit of $60 million, for the year ending 30 June. "We think the fact we are profitable is a step in the right direction," says Gebremariam.

Alongside the ambitious $10 billion revenue target - with a fleet of 120 aircraft - by 2025, its long-term strategy also sets a challenging 10% margin in targeting $1 billion profit. Gebremariam believes this is achievable given a focus on cost, the diversification of the airline into a wider aviation group and the growth potential of the region.

"We have a big cost-savings project. Last year this saved about $60 million," says Gebremariam, while also pointing to its relatively low labour costs. It is also looking to expand its business in areas such as maintenance. "We are going to grow the ancillary services. We are transforming the airline into an aviation group with seven units," he explains.

He adds the airline is well situated to tap into growth. "We are located in one of the fastest growth areas. We can still continue to grow and fast growth is projected. But it has to be profitable," he says.

"In terms of growth we are focusing on China, India and Asia in general, and Africa and Latin America, and particularly Brazil," he says. The airline is hoping to finalise plans shortly for a new São Paulo service from next spring. "We have a strategic map where we connect a line from China, India to Africa and to Brazil. So that's where most of the growth is going to come," he says. China is already its largest destination country which it serves with 26 weekly flights.

Ethiopian has built much of its growth on developing its presence across the African market, and has supplemented its own base in east Africa by teaming with Togolese carrier ASKY to give it a presence in west Africa. Under its growth strategy Gebremariam envisages similar developments to strengthen its presence elsewhere in the continent.

But he acknowledges that progress on Africa's long-stalled aviation liberalisation remains a challenge in tapping its potential. "We think the African carriers that are doing well should have good access to the continent, because we want to change the market share. Right now 80% of the market share if flown by non-African carriers. So we want to address that issue," he says.