Ethiopian Airlines claims record revenue but hundreds of millions of dollars in foreign currency holdings

. Ethiopian Airlines has $220 in foreign currency holdings

borkena,Ethiopian News
February 7,2017

Ethiopian Airlines
Ethiopian Airlines, seen here in a file photo, diverted one of its planes to St. John’s on Wednesday. (Tiksa Negeri/Reuters) (CBC)

When Ethiopian Airlines was established in 1945, nearly all of African countries were under colonial rule. Nelson Mandela wrote in his memoir that he was surprised to see a black pilot on board of Ethiopian Airlines to Ethiopia well before he was thrown to jail. At 72 years of age now, Ethiopian is flying nearly 100 destinations in Africa,Middle East,Europe,Asia,Australia and North America.

According to a report published today by Reuters, Ethiopian Airlines got record revenue in the 2015/16 fiscal year.

The numbers?

Tewolde Gebremariam, CEO of Ethiopian Airlines, is cited by Reuters as saying that revenue was up by 10.3 percent and total revenue is about 54.5 billion Ethiopian birr, which is the equivalent of US $2.43, in the 2015/16 year. Net profit is six billion Ethiopian birr.

Similarly, number of passenger reportedly increased by 18 percent. Ethiopian transported 7.6 million passengers.

Yet, there appear to be financial challenges that the airlines is experiencing in relation to hard currency supply in African countries which seem to be a barrier to repatriate sales to Ethiopia, added the report. For example, “…the airline had local currency holdings worth $220 million in Nigeria, Angola, Sudan, Egypt and some other states, but this was losing value as the local currency depreciated,…”

Is that it?

Certainly not. What is not reflected in the report is the financial standing of Ethiopian. The terminal it is using now at Bole international Airport was built with loan arrangement from Europe. It is not clear if it is paid off.

Moreover, this year alone, the airlines took additional loans from Africa Development Bank and a Chinese bank which is said to be nearly $500 million dollars. If the airline was in good financial standing, it is unlikely that it would borrow interest bearing money.

Management

Despite its reputation as best African carrier, Ethiopian airlines has its own struggle in terms of management as well. And it is a reflection of politics in the country. Some even go so far as describing the airlines as “Tigray airlines” to denote claim that ethic Tigraians are dominating the airlines.
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