Ethiopian Airlines is in talks for a stake in Eritrean Airlines and a study will be conducted to determine the size of the acquisition, the Ethiopian carrier’s chief executive said.
“We are assessing the situation of Eritrean Airlines right now,” Tewolde GebreMariam told Reuters during a visit to Asmara. “I spoke with the CEO yesterday. They have one leased airplane – a Boeing 737. We started discussions.”
Tewolde travelled to Asmara with an Ethiopian delegation on the first commercial flight from Ethiopia to Eritrea in 20 years – cementing a rapprochement that ended a generation of hostility between the neighbouring Horn of Africa countries in a matter of days.
The two 90-minute flights put the icing on the cake of a peace push by Ethiopian Prime Minister Abiy Ahmed. His first three months in office have turned politics in his country – Africa’s most populous after Nigeria – and the wider East African region on its head.
“It is beyond opening routes. This one is different because politically, economically and socially, the flight we flew is going to make radical changes between the people of Ethiopia and Eritrea. It is a game changer,” Tewolde said.
The CEO said based on demand and bookings, starting in a couple of weeks Ethiopian Airlines would fly twice daily to Asmara.
“We plan to fly to Massawa and Assab. We have not assessed the market in the two towns and will send market research people,” he said.
“Demand is heavy not only because of Eritrea and Ethiopia but also from Eritreans living in Europe, America and so on eager to visit friends and relatives in Asmara,” he added.
“Connections were previously not smooth for them to come home. They had to go through Dubai or Istanbul and it is not convenient. Now they have direct flights from the US, Canada and Europe.”
NEXT STAGE OF GROWTH
As the country prepares to open up state-owned enterprises for private investment, Ethiopian Airlines is ahead of the curve and will evaluate whether it needs capital or not in its next growth stage.
“For the time being, we have business units ready for private investors. The hotel business, aerospace manufacturing arm and logistics,” Tewolde said. “As we go forward, we see other areas requiring investors.”
The airline has been buying shares in other African airlines, a strategy aimed at gaining a competitive advantage against rivals such as those in the Gulf.
Tewolde said if African carriers are interested in cross-exchange of equity, the airline, the continent’s largest by revenue and profit according to the International Air Transport Association, would evaluate propositions.
They would prefer joint ventures. “We are open to investment and are actively recruiting investors,” he said.