As Fuel Soars, Ethiopian Airlines Tightens Belt

Addis Ababa, Ethiopia – Only a few months since declaring profits and making across-the-board salary increases of 20pc, Ethiopian Airlines finds itself taking drastic cost cutting measures to save up to one billion Birr, which management hopes will relieve the national carrier from an imminent difficulty in operation, sources disclosed.

Such measures include a series of meetings soliciting its 5,635 employees to come to its rescue, relinquishing part of their salaries, providing free services during leisure times and increased efficiency. The drastic cost cutting initiative aims at slashing operating costs short of the costs for fuel and oil, for the latter are beyond the sphere of influence of the company. The management plans to gain close to 303 million Br saved from efficiency in maintenance and repair costs.

Among the proposed methods of participation in the initiative, which may include security personnel giving up meals, are unpaid leisure time work, increasing the number of customers, avoiding material wastage, servicing foreign planes, negotiating to get reduction of lease of rented aircraft, reducing maintenance costs, and reducing overall operation costs, according to those who participated in the meetings.

In separate meetings held over successive days last week, with different categories of employees, the management of Ethiopian Airlines has admitted confronting trying days ahead, due to a sudden surge in the price of fuel globally, according to sources.

The rise in expenditures was attributed by the Airlines to the spiraling global prices of oil, which took up to 39pc (6.7 billion Br) of its total spending, according to Ethiopian’s nine-month report to Parliament’s Transport Affairs Standing Committee, on May 9, 2011. Traditionally, what Ethiopian Airlines spends on buying fuel constitutes half of its operating expenses, which stood at 15.4 billion Br during its operations in the year 2009/10, up by 37.3pc from the previous year. Read Full Story on Addis Fortune.

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