Ethiopian Airlines Firmly Rejects Leasing Planes to Russia
Ethiopian Airlines Group CEO Mesfin Tasew has directly and explicitly denied reports from a local newspaper, Capital, that the airline was in talks to lease aircraft to Russian carriers. The reports suggested a "wet-lease" arrangement, which would have included not only the aircraft but also the crew, maintenance, and insurance. The CEO's denial was multi-faceted:
- Corporate Strategy: Mesfin Tasew stated that leasing planes to another carrier would be contrary to Ethiopian Airlines' current growth strategy, as the airline is actively seeking to expand its own fleet to meet increasing passenger and cargo demand.
- Compliance and Sanctions: The CEO emphasized that the airline has significant operational and commercial ties with the United States and operates in full compliance with international regulations and U.S. sanctions. He made it clear that the airline would not risk violating those laws by engaging in business with Russia.
- ECAA's Role: The reports were partly fueled by a meeting between the Ethiopian Civil Aviation Authority (ECAA) and a Russian delegation. The ECAA clarified that while such discussions did take place, the authority has no mandate to instruct Ethiopian Airlines on its business decisions, and no formal agreement was ever reached.
The Rationale Behind Domestic Fare Adjustments
Ethiopian Airlines has reported a $28 million loss from its domestic flight operations for the 2024/2025 fiscal year. CEO Mesfin Tasew provided a detailed explanation for this loss and the resulting fare adjustments:
- Currency and Costs: The airline's operational costs, including aircraft purchases, leases, spare parts, and jet fuel, are all priced in U.S. dollars. However, domestic tickets are sold in Ethiopian Birr. Following a significant devaluation of the Birr, the airline's costs have doubled in local currency, while domestic fares have not kept pace.
- Unsustainable Operations: Mesfin Tasew warned that operating at a loss is not sustainable for the airline. The company had initially absorbed these costs for a period to maintain affordability, but it has now become necessary to adjust fares to better reflect the true operational costs.
- Seasonal Pricing: The airline’s justification for higher holiday prices is rooted in the economics of demand. During peak holiday seasons, flights from major hubs like Addis Ababa to regional destinations are often full, but the return flights are nearly empty. To cover the cost of these empty return legs and manage losses, the airline implements seasonal pricing adjustments.
The Unresolved Eritrean Debt and Political Tensions
The issue of the $3.7 million that Ethiopian Airlines has been unable to recover from Eritrea remains a significant point of contention. New details reveal that this is not just an unpaid debt but also an issue of frozen funds.
- Counter-Lawsuit: In a significant escalation of the dispute, the Eritrean Civil Aviation Authority has filed a lawsuit against Ethiopian Airlines. The lawsuit is reportedly for over $3 million, with claims for both unpaid services dating back to the late 1990s and compensation for lost luggage. This has turned the dispute into a legal and diplomatic stalemate.
- Deteriorating Political Relations: The financial dispute is widely viewed as a symptom of a deeper, and more dangerous, deterioration in the relationship between Ethiopia and Eritrea. Recent reports indicate an increase in border tensions, military buildups, and a war of words between officials. Ethiopia's renewed push for access to a Red Sea port is seen as a primary cause of this friction, with some analysts warning that the current situation could escalate into a new conflict. The dispute over the airline's money is a reflection of this broader geopolitical instability.
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