Tuesday, May 23, 2017

Ethiopian Airlines' Business-Class Goals Hit by Airbus Delay

Ethiopian Airlines was betting Airbus’s new A350 wide-body would help it lure lucrative business-class passengers away from the likes of Emirates, but nagging delivery issues are putting Africa’s largest carrier behind schedule.

The airline won’t receive 10 new planes by the end of June as planned, with some coming as late as next year, Thomas Gabreyohannes, the carrier’s director for Germany and central Europe, said in an interview. Ethiopian is counting on the A350s to increase sales of premium tickets, similar to the boost it saw after becoming the first African airline to fly Boeing’s 787 long-haul Dreamliners.

“When we received the Dreamliner, our business-class traffic jumped,” Gabreyohannes said in Frankfurt. “We hope the A350 will have the same impact.”

The delay represents a stumbling block for state-owned Ethiopian, which despite regional political unrest and violence, is increasingly challenging bigger rivals that have extensive African routes. Ethiopian has built one of Africa’s rare corporate success stories with the continent’s only consistently profitable airline shuttling passengers from around the world to more than 50 African cities in addition to dozens of destinations in Europe, the Middle East and Asia, mimicking models like that of Dubai-based Emirates.

Ethiopian now has four of the twin-aisle A350s and was expecting another 10 by the end of next month. According to the new schedule, four will arrive by the end of this year and the remaining six in 2018.

Airbus, which declined to comment on Ethiopian’s timeline, so far has delivered 81 of the jets -- typically used on long-distance flights -- and expects this year’s A350 handovers to beat last year’s 49. Assembly has been hampered by a shortage of seats and other interior fittings supplied by Zodiac Aerospace.
‘Huge Pressures’

Ethiopian currently serves London and Frankfurt daily with its A350-900 variant, and also takes the aircraft on shorter routes from Ethiopia’s capital Addis Ababa to Mumbai and Dubai. The new planes may be used to expand services to Beijing, and Paris is among new destinations under consideration, Gabreyohannes said.

The carrier has not yet decided if it will also buy the larger A350-1000, and is still weighing which model to use for short-haul services. Bombardier Inc.’s Q400 and C Series and models from Embraer SA are still in the race, Gabreyohannes said.

Founded in 1945, Ethiopian ranks as Africa’s biggest carrier by passenger traffic, ahead of South African Airways, EgyptAir, Royal Air Maroc and Kenya Airways, according to the International Air Transport Association.

While outbreaks of violence around ethnic conflicts and human-rights protests have claimed hundreds of lives in Ethiopia in the past year, the airline’s growth plan is intact. Capacity rose more than 15 percent in the six months through Dec. 31, and revenue by passenger kilometers, a measure for demand, also gained about 15 percent, Gabreyohannes said. The airline expects similar increases for its fiscal year ending June 30.

“There was some slowness in demand particularly from Africa that has recovered,” he said. “Demand is good now, but there is huge pressure on yields due to the highly competitive prices.”

(Richard Weiss - Bloomberg Business News)

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