Passengers exit an Ethiopian Airlines jet in Geneva. Picture: REUTERS
Passengers exit an Ethiopian Airlines jet in Geneva. Picture: REUTERS

Addis Ababa — Ethiopian Airlines Group has shelved plans for a fleet of smaller jetliners as gains in demand suggest the routes where they would be deployed would be better served using larger aircraft.

Africa’s biggest airline had been looking at Bombardier’s C Series aircraft — since taken over by Airbus and renamed the A220 — together with Embraer’s E195. An order, which had been expected at this week’s Farnborough airshow, is now off the agenda, CEO Tewolde GebreMariam said.

"We have decided to suspend the evaluation of the 100-seater regional aircraft acquisition project since the market size of the selected regional routes is growing faster than expected," he said. Boeing 737 jets from the fleet will be used while the airline studies passenger trends.

Tewolde also said there was no prospect of an order for the Airbus A350-1000 wide-body or Boeing’s rival 777X at the Farnborough expo, with Ethiopian still evaluating the two planes for its latest long-haul requirements. A purchase of more of the US company’s 777s or the 787 Dreamliner remains an alternative, he said.

The CEO said privatisation plans, sanctioned by Ethiopia’s ruling politburo last month, are more likely to see foreign involvement in various operating units than an outright stake sale, given Ethiopian Air already makes a significant economic contribution to the nation while being efficient, competitive internationally and able to raise capital for growth.

Of the group’s seven or eight business units, some will be "very attractive" to investors and could also benefit from outside involvement, he said. He cited the airline’s hotel business, airports, aerospace manufacturing — where negotiations are under way with companies including Boeing, Airbus and Bombardier, — and its logistics arm, where a venture with Deutsche Post’s DHL brand should be transformed into a joint holding, giving the German company a 49% stake "within weeks".

It is also possible that countries where Ethiopian is working on international offshoots could take reciprocal stakes in the Addis Ababa-based carrier, said Tewolde. The CEO said in May that his company would take holdings in new operators in Zambia, Chad, Mozambique and Guinea while helping to manage carriers in Equatorial Guinea and the Democratic Republic of Congo.

Ethiopian has been in talks with the chairman of Djibouti Airlines over potentially swapping shares, Tewolde said. A stake in Eritrean Airlines would also be a "logical step", the CEO said.

Ethiopian, which has turned Addis Ababa into Africa’s equivalent of the Persian Gulf hubs, linking almost 70 global cities with close to 60 across the continent, already owns stakes in Malawi Airlines in the south and Togo-based Asky Airlines in the west. The new initiatives are aimed at consolidating its lead over rivals Kenya Airways Plc and state-owned South African Airways.