Ethiopian Airlines plans major expansion of regional ventures, takeover of Nigeria’s Arik Air misreported, says CEO

Ethiopian Airlines Enterprise is in talks about founding regional divisions in Zambia and Chad and aims to buy part of the Democratic Republic of Congo’s national operator in a push to consolidate its lead as Africa’s biggest carrier.

An outline plan for a joint-venture airline in Zambia should be signed with the government and private-equity investors in a few weeks, leading to a final agreement by November, Chief Executive Officer Tewolde GebreMariam said in an interview, according to Bloomberg. That will give Ethiopian a new hub in Lusaka serving southern Africa alongside Malawian Airlines, in which it has a stake.

Parallel discussions are underway in Chad for the establishment of a new national carrier there, Tewolde said. Ethiopian also wants to take equity in state-owned Congo Airways, with which it already has a strategic partnership including technical assistance, the CEO said in Addis Ababa, where his company has built up a major hub targeting inter-continental transfer traffic.

While Ethiopian Air is pursuing alliances on several fronts, with Uganda mulling proposals for a joint venture and Equatorial Guinea’s Ceiba Intercontinental a candidate to upgrade a maintenance deal into something bigger, Tewolde said there’s no truth to reports that his company is seeking to buy Arik Air, the largest airline in Nigeria, Africa’s most populous country.

“We haven’t had any discussions and we have not submitted a bid,” the CEO said, adding that while there were talks last year, Arik is now under the control of national receiver Asset Management Corp. of Nigeria. He said he was also unaware of interest in Arik from any other bidders.

Nigeria has separately appointed advisers including Deutsche Lufthansa AG’s consulting arm to evaluate the business case for setting up a new national airline, Reuters reported in May. That plan may provide opportunities for Ethiopian Air in the future, though there have been no talks, Tewolde said. The carrier already has a foothold in West Africa through ASKY Airlines of Togo.

Plans for an airline in South Sudan are on hold given the “very difficult” situation in a country in the fourth year of a civil war, the executive said.

Ethiopian, Africa’s largest airline by revenue, is continuing to evaluate single-aisle jetliner models as it closes in on an order for between 10 and 20 aircraft with 100-plus seats before the end of this year, Tewolde said.

Boeing Co.’s smallest 737 Max 7 is in the running, alongside the Bombardier Inc. C Series, Airbus SE A320 family and Embraer SA’s E195, with the manufacturers continuing to refine their financial pitches. The Bombardier CS100 might be the most suitable plane, with 106 seats, but buying the Canadian jet would mean adding a new type to the fleet, the CEO said.

The U.S. suspension of Export-Import Bank funding may be an issue for Boeing, he said, as might a fraud probe that’s led the U.K. to suspend export credit for Airbus. The European planemaker was able to provide direct funding for 10 A350-900 jets worth more than $3 billion that Ethiopian agreed to buy at the Paris Air Show, Tewolde said.