Plans by Africa’s fastest-growing carrier, Ethiopia Airways, to double its size by 2025 have received a major boost in the form a $500-million loan from the Chinese government.
The airline is pursuing ambitious plans to increase its fleet from 47 to 110 over the next decade.
A memorandum of understanding (MoU) for the loan was signed by Ethiopian Airlines and ICBC Financial Leasing – a subsidiary of ICBC Bank – during a recent State visit to Ethiopia by Chinese Prime Minister Li Keqiang.
The deal will enable Ethiopian Airlines to acquire Boeing B737 and B787 aircraft through finance lease, sale and lease back, commercial loan or operating lease arrangements.
“The cooperation will support our Vision 2025 of fast, profitable and sustainable growth strategy,” says Ethiopian Airlines CEO Tewolde Gebremariam.
The deal, which is expected to send shockwaves across Africa’s airline industry, at a time when competition is stiff, will entrench the Ethiopian carrier’s position as a leading airline in Africa.
According to ICBC Financial Leasing CEO Cong Lin, the agreement is one of the biggest financial cooperation deals in the aviation industry between China and Ethiopia
“The MoU marks a significant milestone between China and African airlines, [and] will promote deep financial cooperation between China and Africa,” he notes.
The loan gives Ethiopia Airlines the financial muscle to drive its ambitious aggressive expansion programme, geared towards increasing the number of passengers it carries from the current 3.2-million a year to 18-million a year by 2025.
The airline has already made history by becoming the first African carrier to fly the Boeing 787 Dreamliner and is awaiting delivery of eight more such aircraft. Ethiopia Airlines has also invested in six Boeing 777-200LR aircraft at a cost of $1.3-billion over the last six years.
As part of the ambitious expansion plan, the airline is investing in a new cargo terminal, a new hangar and a new headquarters building and is expanding its aviation academy.
The cargo terminal will be among the biggest in the world, with yearly capacity of 1.2-million tons. An amount of $50-million has been invested in the aviation academy, with a view to increasing the number of pilots, technicians and cabin crew that the airline trains.
The airline plans to create multiple hubs on the African continent to not only connect Africa but also effectively serve the 80 international destinations it flies to worldwide. The airline operates 200 daily flights to destinations on all five continents of the world.