Ethiopian Airlines, Africa’s most profitable carrier, has suspended 60% of its passenger fleet in fear of the spread of the coronavirus. The Airlines which has been operating over 125 aircrafts with less than five years of age is also expected to delay its order of over 40 planes.
While the measure is taken due to fall in travel demand and complete lockdown in many countries across the globe, the Airlines diverted to cargo flights to offset its losses.
Africa’s largest carrier, which has lost over USD190 million revenues in the past two months, has disclosed plans to stop flying to another 10 destinations in the coming week, as a part of its effort to combat the spread of COVID-19 in Ethiopia, which has confirmed only 29 cases until today.
The move is a major setback for the Airlines that reported a USD261 million gross profit in the first half of the current Ethiopian financial year, which is expected to conclude in July 2020.
Although not specified, sources say that the airlines plans to layoff contract employees calling the existing situation as one of the most challenging times in the airline industry.
“We have not witnessed such a crisis in our history. More causality in the aviation sector is yet to be witnessed,” said Tewolde Gebremariam, CEO of Ethiopian.
Mr Gebremariam also noted that his company has yet no plans to lay off employees despite the losses incurred due to the pandemic. However outsourced services and contract employees were alerted the possibility of a layoff, a measure opposed by the Association of employees in Ethiopia.
“The Airlines is forcing contract employees to take unpaid leave before employing all cost reduction measures and it is also making unnecessary payment to foreign pilots while refusing to pay salaries its local casual staffs,” the statement of the Association released on April 1, 2020 reads.
African airlines, including Ethiopia, have lost USD4.4 billion revenue following the outbreak of the virus, according to International Air Transport Association (IATA). “Demand for travel significantly reduced in Africa,” said Adefunke Adeyemi, the Association’s Regional Director for Advocacy and Strategic relations in Africa.
According to the global body, International bookings in Africa dwindled by 20% in March and April, whereas domestic bookings showed a 15% fall in March and expected to decline by 25% in April.
“The situation of the airline industry remains grave. As you know, we have been working from a scenario of severe travel restrictions lasting for three months. That will cut industry revenues by USD252 billion in 2020 compared to 2019,” said Alexandre de Juniac, CEO of IATA during a teleconference on March 31, 2020.
When borders are closed and people’s mobility is limited by governments, our business disappears. And, of course if we cannot move people, that impact is felt across the economy, not least of which in the tourism sector, he added.
Meanwhile, Ethiopia’s Prime Minister Abiy Ahmed announced his administration intent to introduce reforms targeted at bailing out the nation’s carrier.