July 19, 2018 / 11:16 AM / 5 months ago

Ethiopian Airlines says it is in talks for stake in Eritrean Airlines

ASMARA (Reuters) - Ethiopian Airlines is in talks to take a stake in Eritrean Airlines and a study will be conducted to determine the size of the acquisition, the Ethiopian carrier’s chief executive said in an interview on Thursday.

Ethiopian Airlines Chief Executive Officer Tewolde Gebremariam speaks during the ceremony as they resume flights to Eritrea's capital Asmara at the Bole international airport in Addis Ababa, Ethiopia July 18, 2018. REUTERS/Tiksa Negeri

“We are assessing the situation of Eritrean Airlines right now,” Tewolde GebreMariam told Reuters during a visit to the Eritrean capital Asmara. “I spoke with the CEO yesterday. They have one leased airplane - a (Boeing) 737. We have started discussions.”

Tewolde traveled to Asmara on Wednesday with an Ethiopian delegation on the first commercial flight from Ethiopia to Eritrea in 20 years - cementing a stunning rapprochement that has ended a generation of hostility between the neighboring Horn of Africa countries in a matter of days.

The two 90-minute flights put the icing on the cake of a peace push by new Ethiopian Prime Minister Abiy Ahmed. His first three months in office have turned politics in his country - Africa’s most populous after Nigeria - and the wider East African region on its head.

“It is beyond opening routes. This one is different because politically, economically and socially, the flight we flew yesterday is going to make radical changes between the peoples of Ethiopia and Eritrea. It is a game changer,” Tewolde said.

The CEO said that based on the demand and bookings he had seen, starting in a couple of weeks Ethiopian Airlines would fly twice daily to Asmara.

“We plan (also) to fly to Massawa and Assab. We have not assessed the market (in the two towns), so we will send market research people,” he said.

“The demand is heavy not only because of Eritrea and Ethiopia but also demand from Eritreans living in Europe, America and so on who are eager to visit friends and relatives in Asmara,” he added.

“Connections were (previously) not smooth for them to come back home. They have (had) to go through Dubai or Istanbul and it is not convenient. Now they will have direct flights from the U.S., Canada and Europe.”

NEXT STAGE OF GROWTH

As the country prepares to open up its state-owned enterprises for private investment, Ethiopian Airlines is ahead of the curve on that front and will evaluate whether it needs capital or not in its next stage of growth.

“For the time being, we have business units ready for private investors. The hotel business, aerospace manufacturing (arm), and logistics,” Tewolde said. “As we go forward, we will see other areas requiring investors.”

The airline has been buying shares in other African airlines, a strategy aimed at gaining a competitive advantage against rivals such as those in the Gulf. [L8N1SD0PZ]

Tewolde said that if African carriers are interested in cross-exchange of equity, the airline, the continent’s largest by revenue and profit, according to the International Air Transport Association, would evaluate the proposition.

The CEO said they would prefer joint ventures. “We are open to investment and actively recruiting investors,” he said.

Reporting by Aaron Maasho; Editing by Omar Mohammed and Matthew Mpoke Bigg/Mark Heinrich

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