Will Ethiopian Airlines, Africas most successful airline take over RwandAir?

BY PROF. WOLFGANG H. THOME, PH.D., ETN AFRICA CORRESPONDENT

Ethiopian Airlines adds new B777 to its fleetThere is growing indication that Ethiopian Airlines (ET) has engaged in direct talks with the Rwandan government, seeking a stake in national carrier RwandAir, even though no formal privatization process is in place at this moment in time.

It is thought that RwandAir’s Chairman of the Board of Directors, Girma Wade, himself a long-serving former CEO of Ethiopian Airlines and brought to RwandAir to benefit from his extensive experience in successfully and profitably managing Africa’s largest airline, has been instrumental to set up the talks. Sources in Kigali have described as them as “exploratory” but also conceded that this has been going on since sometime late last year. Confirmation has also been received from Addis Ababa where ET’s CEO Tewolde Gebremariam has yesterday confirmed to Reuters that talks were ongoing.

Grapevine talk has it that Ethiopian may seek a shareholding anywhere between 26 and 49 percent and then take on a greater role in the management of RwandAir, over and above having an Ethiopian already serve in the capacity as General Manager Commercial, recruited in mid-2014.

Ethiopian Airlines, one of Africa’s three members in Star Alliance, is already Africa’s undisputed market leader but has over the past years sought to expand influence on the continent through strategic partnerships. First out of the starting blocks was ASKY in West Africa, followed by Malawian Airlines. Talks with the regime in Kinshasa have also been going on to establish a new national airline in the Congo, probably along similar lines like Malawian Airlines, where Ethiopian holds 49 percent and has seconded management to run the company.

Should talks with the Rwandan government yield results, it would substantially widen ET’s reach in the Eastern African region, largely at the expense of Kenya Airways, which, according to a source close to the airline, has been caught almost unaware of the talks and the unfolding schemes by main African rival Ethiopian. Kenya Airways, saddled with losses in the recent past, seems to pursue a single, stand-alone growth strategy, and with Ethiopian now having two financial partnerships already (ASKY and Malawian Airlines) and potentially a further three falling into place in the near future (Congo, Rwanda, and South Sudan) the gap between the two will widen further and restrict options for KQ following suit.

RwandAir already enjoys a codeshare with Ethiopian for flights between Kigali and Addis Ababa and has maintenance agreements in place to service their Bombardier Q400NextGen aircraft, a second of which is due to join by early Q2.

RwandAir, serving 15 destinations out of Kigali, operates a fleet of four B737NGs, two Bombardier CRJ900NextGens, and currently one Q400, but has another B737-800NG on order for delivery late this year or early next year. The airline is also eyeing the B787 Dreamliner to commence long-haul flights out of Kigali by 2017/18 to China, India, and Europe.

Only recently has RwandAir received fifth freedom rights for flights from Entebbe to Juba and is reportedly waiting for the Kenyan regulators to approve slots for two daily fifth freedom flights between Entebbe and Nairobi.

Fully owned and backed in its development plans by the government of Rwanda, the airline has expanded rapidly in recent years. However, a financial stake by Ethiopian may relieve the Rwandan government of a significant amount of cash requirements for future investments, if the new suitors can be contractually tied down to help pay for turning Rwanda’s vision for their national airline into reality.

http://www.eturbonews.com/54514/ethiopian-airlines-eyes-rwandair-ahead-formal-privatization

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