'Big brother' Ethiopian in talks to set up four African national carriers, as Senegal moves to privatise

Ethiopian has stakes in Malawian Airlines and ASKY of Togo. Nigeria has tapped it for help, and it’s talking with Uganda, South Sudan, and DR Congo.

ETHIOPIAN Airlines Enterprise, East Africa’s biggest carrier by revenue, is considering proposals to help set up national airlines in Nigeria and three other countries to expand its operations on the continent.

The state-owned company, which has stakes in Malawian Airlines and ASKY Airlines of Togo, has been approached by the Nigerian government about a new carrier for Africa’s biggest economy, Chief Executive Officer Tewolde Gebremariam said in an interview on March 20.

Ethiopian Airlines is also in discussions with the administrations of Uganda, South Sudan, and the Democratic Republic of Congo, he said, without giving further detail.

“We have been invited to participate and we’ve given a strong expression of interest,” he told Bloomberg T.V. on a private plane from Dublin to London, where he was promoting a route to Los Angeles via the Irish capital. “As soon as the process allows then we will submit a business proposal.”

Competing with South Africa and Kenya

Ethiopian Airlines is competing with South African Airways and Kenya Airways Ltd. as they expand routes outside their home markets to tap greater demand for travel within the continent. SAA, also state-controlled, is seeking a hub in West Africa that would also be a stop-off point on the way to the US. 

London-based FastJet Plc is trying to add routes as part of an effort to become the first pan-African discount airline.

Ethiopian Airlines plans to quadruple annual revenue to $10 billion over the next decade and increase the number of international destinations to 120 from 84, Gebremariam said. The airline also hopes to expand its fleet to 140 planes from 80 by that year.

South African Airways had revenue of 30.3 billion rand ($2.6 billion) in the year ending March 2014, while Kenya Airways Ltd., the continent’s third-biggest carrier, generated 106 billion shillings ($1.2 billion) over the same period.

Nigeria is seeking private investors to help set up a flag- carrier as it expands airport infrastructure, Aviation Minister Osita Chidioka said last year. State-owned Nigeria Airways stopped operations in 2003, and the country’s biggest airline is now closely held Lagos-based Arik Air Ltd.

Uganda is also in talks to revive state airline Uganda Airlines more than a decade after its liquidation, Voice of America reported in October.

Senegal to sale stake

MEANWHILE Olivier Monnier and Colin Baker report that Senegal Airlines will be nationalised and the government will sell a minority stake in the carrier by June to prevent it from collapsing.

The government will convert the debt it holds to equity in a new company, Amadou Hott, chief executive officer of the nation’s sovereign wealth fund, said in an interview on March 20.

Senegal will sell 49% of the airline, Hott said. The remaining 51% will be owned by the government and private Senegalese investors, he said. The fund will manage the government’s stake, he said.

Currently, Senegal owns about 35% and the rest is held by private investors.

“We will apply a restructuring plan,” Hott said. “The state wants to develop a good airline company and make Senegal a hub for civil aviation.”

The government has sought a partner for more than a year to rescue the carrier, which was running unprofitable routes. President Macky Sall said earlier this month the airline needs new planes and managers to return to profit.

“We are in this transition phase that would bring the state to have a major stake in the company,” Senegal Airlines CEO Mayoro Racine said. “We need cash, from the state, from the shareholders or from new investors.”

Racine declined to provide details by phone on March 24. The government holds a majority of the carrier’s debt of 45 billion CFA francs ($75 million), he said.

An airline in the United Arab Emirates is in talks with the government to buy the minority stake of the restructured company, Hott said. He declined to name the airline. The new company will fire some workers to reduce costs, Hott said.

Senegal Airlines was set up in 2009 after the collapse of Air Senegal International and operated its first flight in 2011. The carrier originally aimed to fly to 15 cities in West Africa, according to its website. Senegal Airlines has two planes, Racine said.

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