Ethiopian Looks beyond 2010 to $1.5b Revenue
Ethiopian new strategic plan targets transporting five
million passengers annually by 2015.
24 November, 2008
Addis Fortune - The management of Ethiopian Airlines (Ethiopian) has outlined a new five-year strategic plan to reach an annual revenue of 1.5 billion dollars following the remarkable achievement in what the airline calls "Vision 2010".
The national carrier has almost managed to reach its targets in the current strategic plan - "Vision 2010" - well ahead of schedule.
The airline generated an annual revenue of 941 million dollars in the 2007/08 fiscal year. Its target is to achieve one billion dollars by 2010, the year the strategic plan period ends.
An earlier strategic plan had been prepared in consultation with Ernst & Young.
But this time around, the management of Ethiopian was determined and confident enough to stand on their own: they drafted the new five year vision without the involvement of any consultant.
"Though the management and the board has not yet approved it, we set a five year plan to generate 1.5 billion dollars by 2015," Kassim Geresu, vice president for Finance and Planning Department of the airlines told Fortune.
An increase in annual revenue is one part of the strategic plan. As for Vision 2010, the new strategic plan has a number of set goals in different areas of the airline's operations, including an increase in the annual number of passengers transported, as well as the addition of new destinations.
While the airline had set a target of transporting three million passengers annually by the end of the current strategic plan period, it had already reached 2.5 million by 2007/2008 - a 20pc increase from its previous fiscal year's performance - with still plenty of time remaining for the period to end.
The new strategic plan targets transporting five million passengers annually by 2015.
Despite Ethiopian's ambitious plans, many in the aviation industry are becoming pessimistic about the future of the industry, mainly due to the global financial crunch.
The International Air Transport Association (IATA) estimated loses in the global airlines industry in 2008 to be 5.2 billion dollars. African carriers account for 700 million dollars of the total loss.
The increase in oil price of a few months ago and the recent falling demands are the major factors that have severely affected the industry, according to the association. It also forecasts that the 2009 business environment, based on the trends of the current financial crisis, will be highly unfavourable.
Most economies of the world are expected to perform weaker due to the financial crisis, which will impact negatively on the aviation industry, incurring a further loss of 4.1 billion dollars to the industry.
Though Ethiopian has so far been successful in the face of these challenges, its annual operating expenses climbed to 8.8 billion Br in 2007/2008, up by 31pc from the previous year's expenditure.
"The soaring price of oil in 2007/2008, which has affected our profitability, took the lion's share of our expenses" Kasim told Fortune.
Kasim, however, believes that the impact of the global financial crisis will not hinder the airline from achieving the new vision. He said the global financial situation would have a negative impact on carriers that have been flying to tourist destinations.
"Its impact will not be significant on airlines like Ethiopian," he added.