Ethiopian ramps up cargo investment for African E-commerce hub

Ethiopian Airlines Group will ramp up investment in cargo services and infrastructure and is looking to become a logistics hub for Africa’s growing e-commerce market.

The continent’s largest airline is considering an order for about five Boeing Co. 777 freighters and may also take upcoming Airbus SE A350s, Chief Executive Officer Tewolde GebreMariam said in an interview. The carrier is also looking to expand its cargo operations in Addis Ababa and hire new people, he said.

“We are building a new e-commerce warehouse in the cargo terminal,” he said in an interview from the U.S. “E-commerce is growing especially between China and Africa and we want to continue the leadership,” he said.

While Ethiopian has long been a major operator in freight, the Covid-19 pandemic has elevated demand as stay-at-home rules triggered a boom in online retail. Carrying goods during the past two years helped many airlines stay afloat, as border closures hammered demand for air travel.

China is a major investor in Africa and Safaricom Plc, Kenya’s biggest mobile operator, has a partnership with a unit of internet group Alibaba Group Holdings Ltd. to facilitate electronic payments.

Cargo now accounts for half of Ethiopian’s revenue, compared with about 15% before the coronavirus, Tewolde said. That figure may drop to 30% as passenger services recover, which he said is likely to accelerate when China opens up in the second half of 2022.

“Cargo is the breadwinner, that’s how we remain profitable and cash positive,” Tewolde said. “The passenger side is still suffering. We are about 70% of pre-Covid capacity.”

Ethiopian is finalizing the creation of new airline in the Democratic Republic of Congo, and will own 49% of the company. It has similar partnerships with the governments of Zambia, Chad and Malawi. However, a previous plan to order narrow-body A220 planes that would have helped connect the continent has been shelved, Tewolde said, without giving a specific reason.

Max Returns

The company has announced plans to resume flights with Boeing’s 737 Max on Feb. 1, almost three years after a deadly crash outside Addis Ababa led to a global grounding of the model. The U.S.’s FAA and several other regulators have re-certified the plane and “significant modifications were made,” Tewolde said.

“Our pilots and engineers are fully satisfied,” he said.

Authorities in Ethiopia are yet to release a final report into the March 2019 crash that killed 157 people.

“It is very clear the report may not reveal any new thing,” Tewolde said. “It is proved beyond reasonable doubt that the design of the airplane is the cause of the accident.”