Ethiopian to buy a stake in Air Malawi

The airline is also set to establish a new airline in Zambia, reports Kaleyesus  Bekele from Johannesburg

The Ethiopian Airlines is to buy a stake in the frail airline of Malawi.  The Government of Malawi recently asked companies to present expressions of interest for the partial acquisition of its failing airline. Subsequently, 11 airlines submitted these to the Malawi Privatization Authority. Ernest & Young has been undertaking a study on the privatisation of Air Malawi which ceased operation this week. After evaluating the expression of interest eight companies were selected to participate in the bid.

At the 44th General Assembly of the African Airlines Association (AFRAA) held in Johannesburg from November 18-20 CEO of Air Malawi, Patrick E. Chilambe, told The Reporter that the bidding companies will submit their proposals to the Privatization Authority. The companies that presented expressions of interest yesterday had a meeting with officials of Ernest & Young and the Malawi Privatization Authority in Blantyre. Com Air of South Africa is the other airline that submitted an expression of interest.

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The government of Malawi plans to establish a consortium by selling a 49 percent stake to a foreign airline and a local investor and keep 51 percent of the shares to Air Malawi.

Hired by the Malawian government, Ernest & Young advised the government to look for a partner and partially privatize the national flag carrier. Two of Air Malawi’s aircraft are in South Africa, retained due to fuel debt. An official close to the privatization process told The Reporter that Ethiopian is the best company among the eight companies that submitted an expression of interest.

Tewolde Gebremaraim, Ethiopian CEO, who was attending AFRAA’s 44 Annual General Assembly (AGA), told The Reporter that Ethiopian wants to help Air Malawi. “They are our African brothers and we want to share our experience,” Tewolde said. The CEO said that Ethiopian is planning to establish a new airline in Zambia. “We have been holding talks with the Zambian government and we hope to sign a Memorandum of Understanding with the government soon,” he said.

Ethiopian partnership with ASKY Airline of Togo has been successful. The Lome-based airline, ASKY, which operates Bombardier Q400 aircraft currently serves 15 destinations in West Africa. Ethiopian owns a 25 percent stake in ASKY.

In a related news, Ernest & Young this week announced that by 2025 Ethiopian will be bigger than South African Airways (SAA). Zemedeneh Nigatu, managing partner of Ernest & Young East Africa, who made a presentation at AFRAA’s AGA held at the Sandton Convention Center in Johannesburg, said that by 2025 Ethiopian will be bigger than SAA. Zemedeneh said SAA will still then be bigger than Kenya Airways (KQ). He attributed Ethiopian Airlines success to management independence. Zemedeneh pointed out that African carriers should collaborate to survive the stiff competition coming from non-African carriers.