African airlines, which before the COVID crisis were already dealing with financial losses, have been particularly vulnerable and have had to seek bail-outs from governments which were already facing financial constraints. African carriers have taken different measures to deal with the crisis, including layoffs, furloughs and fleet reductions.
Global demand for travel declined as a result of the pandemic, leaving a number of major airlines in bankruptcy. Some have ceased operations altogether. The aviation industry has been the hardest hit business as a result of the pandemic and Ethiopian Airlines is no exception. Its passenger service, the airline’s biggest revenue generator, saw most of its revenue plummet, forcing it to ground many aircraft and operate at just 10% of its capacity. This created a huge financial burden on Ethiopian with unavoidable costs such as aircraft- and infrastructure-related payments as well as bank loan repayments.
But Ethiopian has kept its business afloat with diversification strategies and agile management, continuing operations by shifting its focus to cargo, hotel and MRO businesses. It implemented a cost leadership strategy to reduce expenditure while maintaining quality and efficiency.