Ethiopian Air Selects Congo for Fourth Hub to Tap China Demand

Ethiopian Airlines Enterprise said it will locate its fourth hub in the Democratic Republic of Congo as Africa’s No. 2 carrier seeks to tap Chinese economic links and fill long-haul flights to destinations such as Brazil.

Ethiopian Airlines is negotiating with the Congolese government and could agree terms for a startup carrier based in Kinshasa later this year, Chief Executive Officer Tewolde GebreMariam said today in an interview in London.

The DRC’s population of more than 65 million people, coupled with a more benign political situation and natural resources estimated to be worth $17 trillion make the country the ideal location for a central African base, according to the CEO. In addition to Addis Ababa, Ethiopian has also built bases in Togo in the west and Malawi in the south as it vies with South African Airways and Kenya Airways Ltd. to build a pan-African network.

“The Congo is a large country and a large market and while peace has been a problem there seems to be a better situation developing,” GebreMariam said. “We think it’s going to attract a lot of foreign direct investment, and it’s right in the middle of central Africa.”

While the CEO expects to face competition from African peers, as well as outside operators including Brussels Airlines, which has a subsidiary in the Congo, those carriers don’t have such good connectivity, he said.

Rio, Australia

Ethiopian Airlines offers 28 flights a week from China, serving Beijing, Shanghai, Guangzhou and Hong Kong, with its secondary-hub model providing dozens of additional links to African cities that carriers from the Asian nation have no plans to directly serve.

For long-haul flights the bases will also allow for “dual hubbing,” with services from Addis Ababa to New York via Togo, Sao Paulo and Rio de Janeiro via Kinshasa and even Australia via Malawi, GebreMariam said.

The Congo hub would also serve the mostly oil-rich nations of the Central African Economic and Monetary Community or Cemac -- the neighboring Republic of Congo, Gabon, Cameroon, Chad, the Central African Republic and Equatorial Guinea -- he said.

Ethiopian Airlines’ foreign shareholdings are limited to minority stakes because of ownership restrictions, and Malawi’s government plan to sell a 51 percent holding in Malawi Airlines would involve a transaction with local investors, the CEO said. Ethiopian has a 49 percent stake in the carrier.

Ethiopian is also looking at adding 10 to 20 single-aisle planes from Airbus Group (AIR), Boeing Co. (BA) or Bombardier Inc. (BBD/B), and is examining the Boeing 777X and Airbus A350 wide-bodies, the CEO said Jan. 20. Fourteen A350s have already been ordered to swell a 62-strong fleet that features five Boeing 787 Dreamliners.

New destinations under consideration include Los Angeles, Madrid and Jakarta, with Tokyo, Shanghai and Vienna already being added to the network this summer.

To contact the reporters on this story: Christopher Jasper in London at cjasper@bloomberg.net; Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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