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As Ethiopian acquires 49 percent stake in new Chadian airline

Ethiopian Airlines, the largest Aviation Group in Africa has finalized agreements with the Government of Chad for the launch of Chad national carrier. 

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Ethiopian has 49 percent stake in the joint venture while the Government of Chad retains 51 percent, Ethiopian Airlines disclosed in a statement on Saturday.

The new Chad national carrier is planned to go into operation with effect from October 1, 2018. 

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Group CEO of Ethiopian Airlines, Mr. Tewolde GebreMariam in the statement noted that the Chad national Airline would serve as a hub in Central Africa.

 He said: “The strategic equity partnership in the launching of the new Chad national carrier is part of our Vision 2025 multiple hub strategy in Africa. The new Chad national carrier will serve as a strong hub in Central Africa availing domestic, regional and eventually international air connectivity to the major destinations in the Middle East, Europe and Asia. I wish to thank His Excellency President Idriss Deby, the Government of Chad and the stakeholders in the aviation sector in Chad for their strong support to the project.”

Ethiopian has in recent times been acquiring stakes in national airlines.

Through its multiple hubs strategy in Africa, Ethiopian currently operates hubs in Lomé (Togo) with ASKY Airlines and Malawian in Lilongwe (Malawi), while having the already acquired stakes in Zambia’s and Guinea’s national carriers and making preparations to launch Ethiopian Mozambique Airlines.

Ethiopian’s latest pitch is that it shouldn’t just be Africa’s top airline in passenger numbers and destinations but also in its ownership structure. The company’s head suggested the airline should be co-owned by African governments. Tewolde said Ethiopia’s government should capitalize on the airline’s stature to consolidate its place in the African continent. “As a Pan-African airline, I don’t see any reason why we should not sell the minority shares of Ethiopian Airlines to African countries if they are interested in buying.” 

In the fiscal year ending July 2018, the carrier announced it bought a 45% stake to revive Zambia Airways, which went into liquidation way back in 1994. To spread its regional footprint, it also kickstarted negotiations to establish new hubs in Mozambique, Chad, and Equatorial Guinea in addition to the ones it already operates in Malawi and Togo. And as part of its efforts to launch and manage new African haulers, the company recently said they were the lead contestant in a tender aimed at setting up Nigeria’s controversial new national airline. Looking to tap into improving intra-African travel, ET increased its African network to over 58 out of its over 100 international destinations, introducing flights to Kaduna, Nigeria; Kisangani in DR Congo, and Nosy-Be in Madagascar. In late July, the airline announced a deal with DHL to build the leading cargo logistics center in Africa.

Industry experts are calling for caution over ET’s unrestrained acquisition of running of national airlines wondering how many more national carriers would be managed by the carrier.

“First it was with Zambia and now Chad; it still has not given up on Nigeria Air; how many African airlines does Ethiopian airline wants to acquire for the intercontinental airlines within its Alliance?, says aviation analyst, Group Capt. John Ojikutu, rtd.

In a chat with Daily Trust, he said, “In short, it could be a clever way of buying us out completely from our own market which presently is 80% foreign and 20% for us. With the Nigeria Air, we should strive to make it 50 / 50. We must not give partnership concession to any airline that is our competitor on our BASA routes; not ETHIOPIAN not QATAR.

“The implication is this; remember that IATA told us not too long ago that African airlines do not need to go intercontinental but what we need is interconnectivity hence the race now for it. Note also that 80% of African market particularly the intercontinental continental and intercontinental routes are dominated by the foreign airlines outside Africa and mainly members of IATA; that IATA does not want to shift the balance. The race by Ethiopian airline to buy up the weak airlines in African may not be unconnected to the IATA propaganda who is a stronger member of IATA and one of the airlines Alliances than others. So my take in all the race for buying airlines is a strategic move by an alliance between Ethiopian airline, IATA and the Alliances that Ethiopian belongs to.”

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