ET: Optimising Diversification and Long-term Strategy
Air travel has been one of the hardest-hit industries by the COVID-19 pandemic due to the resulting travel restrictions as well as a slump in demand among global passengers. From high-cost carriers to low-cost flights, aircraft have been grounded, as international, regional, and even national routes remain cancelled. Consequently, the unprecedented depletion of passenger numbers has resulted in aircraft flying empty between airports and the suspension of flights, which in turn massively plummeted revenues and forced airlines to lay off employees or declare bankruptcy.
The International Air Transport Association (IATA)’s analysis shows that the COVID-19 crisis will see airline passenger revenues drop by $314 billion in 2020. Similarly, the projection reveals that African airlines would lose USD 6 billion in revenue, crippling the aviation industry which supports 6.2 million jobs and $56 billion in GDP.
The disruption in travel has forced many African airlines to swiftly demand government bailout, scale down the workforce while others delay salaries due to cash flow troubles. Ethiopian Airlines, Africa’s largest and multi-award winning global airline, is not left out of the crippling effects of the pandemic. The Pan-African airline has faced an unprecedented challenge that calls for robust resilience and agility to stay afloat. The airline would lose USD 1 billion from ticket sales starting from January up to June after it suspended its passenger service.
Adopting diversification and long-term strategy as a critical pillar of its strategic road map, Vision 2025, the airline has invested millions of dollars and established full-fledged and revenue-generating Cargo, MRO, Aviation Academy, Catering and Ground Handling and hotel units which made up one of the most recognized aviation group. Before the pandemic struck, the Ethiopian had been treading on a path of fast growth trajectory guided by its strategic roadmap with massive growth in revenue, routes, passenger number, fleet, facilities, etc… meeting its targets well ahead of time.
As it recalibrates its operations in the wake of the pandemic, the airline has emerged as a key enabler in the global effort to conquer COVID-19 by facilitating the shipment of life-saving medical supplies to different parts of the world. It has leveraged on its diversified and long-term business strategy to navigate through the perfect storm. It has continued working on its cargo and MRO operations.
Its massive cargo capacity has been a critical enabler for WFP, the African CDC, the Jack Ma Foundation, and other donors to distribute life-saving supplies to African countries. Thanks to its world-class cargo facilities with a modern warehouse of 1million tons storage capacity, vast network, and fleet, Ethiopia’s capital Addis Ababa has served as Humanitarian Air Hub by Jack Ma Foundation, WFP, and WHO to distribute life-saving medical equipment across Africa.
In the past four months, Ethiopian Cargo & Logistics Services has transported pharmaceuticals, medical supplies, and healthcare products across the globe and saw a 121% revenue growth compared to the corresponding period of the last fiscal year.
Owing to the mounting demand for cargo, Ethiopian has reconfigured 25 of its passenger aircraft to transport life-saving medical equipment needed all over the world from east to west, west to east, north, south, and so on. It regularly operates 12 full freighter aircraft, including 10 B777s and 2 B737-800s, in addition to the reconfigured passenger aircraft.
As an airline that has stood the test of time in like civil war, famine, and epidemics like SARS, MERS, and Ebola, it has continued playing an irrepressible role in Africa’s pandemic response. In a crisis filled with unknowns and surprises, the management has leaned on the solid organizational culture of discipline, resilience, ingenuity, and co-operation that has made the flag carrier unbeatable in the face of adversity. The agility and drive to restructure resources and operational systems have enabled the team dynamics of the airline to respond collectively to the pandemic. The growth mindset nurtured and instilled in the employees has created clarity in task division and responsibilities, stable internal systems, and processes that go beyond self-sufficiency and be at the forefront in the global fight against COVID-19.
At a time when things get worse before they get better, Ethiopian has continued its mission-critical services across the world without seeking government bailout, employee layoffs, and fight the invisible enemy.
