Download Annual Report 2010/11
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CONTENTS 2 Board of Management 3 CEO’s Message 4 Management Team 5 Mission Statement 6 Corporate Social Responsibility 8 News Highlights 11 Finance 19 Glossary 20 Auditors Report & Financial Statements 42 Ethiopian Airlines General Sales Agents 43 Ethiopian Airlines Offices 44 International Route Map 46 Ethiopian Airlines Domestic Offices BOARD OF MANAGEMENT CEO’s MESSAGE The year 2011 has been very challenging one for the entire airlines industry in general and Ethiopian in particular. Following the Arab Spring, crude oil price has risen from an average of USD 79 per barrel to a peak of US 122 per barrel. My executive management had to battle with such a daunting challenge in a time when we have embarked on to one of the most ambitious growth and expansion program in line with our Vision 2025 strategic road map. The weak economies in Europe, USA and the civil unrest in North Africa and the Middle East have also increased pressure on the top line of our P&L statement. This tough economics operating environment severely tested our ability to effectively manage the different businesses of the airline. However, with strong teamwork, dedication and hard work among all the 6,286 brave men and women of the airline, executive management and the Board of Directors, we have made it an eventful, demanding, but ultimately successful financial year. As a result, I am delighted to report that Ethiopian Airlines has passed the test with remarkable success and registered strong growth rates across all performance parameters compared to the last fiscal year. Capacity measured in terms of Available Seat Kilometers (ASK) increase by 24%; passengers carried grew by 19%; freight uplift rose by 20%; operating revenue reached ETB 24.7 Billion, higher by 43%, whereas operating expense topped ETB 24.3 Billion, a 53% increase primarily due to the rise of oil and fuel prices. Consequently, the net result of the fiscal year 2010/2011 shows a net profit of ETB 1.23 Billion. Although, for the major part of the year, we have focused on maintaining high frequency strategy rather than network expansion; we have added Hangzhou, Bangui, Milan, Maputo and Malakal to our list of worldwide destinations in response to the growing demand of our customers. I need not elaborate on the added value and benefits to our loyal customers as a result of bringing these dynamic and exotic cities into the family of Ethiopian’s global network. Our fleet modernization project has seen, in the beginning of the fiscal year, the complete replacement of the F-50 fleet by the modern technology new fleet of the Bombardier Q-400 which has been serving our domestic and regional routes. This aircraft is the fastest, quietest and most economical turbo-Propeller in its category. With the arrival of its B777-200 LRs, Ethiopian also upgraded the standards of its services thereby enhancing its passenger comfort. The new fleet allowed Ethiopian to introduce a world class sleeper seats and a state-of-the-art entertainment system in business class. The B777-200LR is an ultra modern and long-range twin engine worldliner capable of connecting virtually any two cities in the world nonstop. As a result, Ethiopian now flies daily nonstop to Beijing and likewise from Washington DC to Addis Ababa. Ethiopian Airlines is helping and playing a leading role in transforming Addis Ababa and Ethiopia into a world class aviation hub of the African continent not only for trade and business but also for tourism. Addis Ababa is now becoming a pivotal link that is connecting four continents. In view of these positive developmental and success stories, as well as our policy of continuous improvements in all areas of the Airline’s operations, we look forward to even greater results in 2011/12 culminating in increased customer satisfaction. The future of Ethiopian Airlines is bright. With its exceptional know-how, long time experience, management efficiency and flexibility and employees dedication; Ethiopian is well positioned for continued growth and success stemming from a history of stellar achievements. Through high professional standards, commitment and visionary leadership at all levels of the organization, I am very confident that Ethiopian will continue on the path of excellence and prosperity in line with its Vision 2025. I would also like to add a word of gratitude and sincere appreciation to all our customers and stakeholders for their continued support that made the fiscal year 2010/11 yet another year of success. Tewolde G. Mariam Chief Executive Officer 2 | ETHIOPIAN AIRLINES ANNUAL REPORT 2010-11 | 3 MANAGEMENT TEAM MISSION STATEMENT MR. Tewolde Gebremariam To become the most competitive and leading aviation group in Africa by providing safe, market driven Chief Executive Offi cer and customer focused passenger and cargo transport, aviation training, flight catering, MRO and ground services by 2025. Mr. Gobena Mikael Mr. Mesfi n Tassew Mr. Kassim Geressu Mr. Essayas Wolde Mariam A/CCO and SVP Global Sales Chief Operating Offi cer Chief Financial Offi cer VP Ethiopian Cargo • To become the leading aviation group in Africa by providing safe and reliable passenger and cargo air transport, Aviation Training, Flight Catering, MRO and Ground Services whose quality and price “value proposition” is always better than its competitors. • To ensure being an airline of choice to its customers, employer of choice to its employees and an investment of choice to its owner. • To contribute positively to the socio-economic development of Ethiopia in particular and the countries to which it operates in general by undertaking its corporate social responsibilities and providing vital global air connectivity. Mr. Zemene Nega Mrs. Elizabeth Getachew Mr. Samuel Assefa Mr. Yissehak Zewoldi SVP MRO SVP Corporate HRM VP Ethiopian Aviation Academy VP Alliances & Corporate Strategic Planning • As an airline, safety is our first priority. • Ethiopian is a high performance and learning organization with continuous improvements, innovation and knowledge-sharing. We accept change for the growth opportunity it brings and always seek for and apply the best and ethical ideas regardless of their source. • We recognize and reward employees for their performance and demonstrate integrity, respect to Mr. Yeneneh Tekleyes Captain Desta Zeru Mr. Solomon Debebe Mr. Kemeredin Bedru VP Marketing VP Flight Operations VP Customer Services Chief Information Offi cer others, candour and team work. • Act in an open fashion and be result-oriented, creative and innovative. • Adopt Zero tolerance to indifference, inefficiency and bureaucracy. • Encourage 360° free flow and sharing of information. • Treat our customers the same way we would like to be treated and always look for ways to make it easier for customers to do business with us. • We are an equal opportunity employer. Mr. Nega Mekonnen Mr . Wassu Zelelew Ms. Rahel Zerihun VP Corp orate Finance VP Internal Audit & Compliance VP Legal Counsel & Corp orate Secretariat 4 | ETHIOPIAN AIRLINES ANNUAL REPORT 2010-1 1 | 5 CORPORATE SOCIAL RESPONSIBILTY Ethiopian Supports the Teenagers Initiative Ethiopian Airlines as a leading African airline will continue to support the social development efforts of the continent further to providing Ethiopian helped 13 years old Diaspora Hannah Godefa for her endeavor to aviation services to its customers. Ethiopian this year also extended its support to various social development projects designed to build App transport 50,000 pencils that she gathered from individuals and different the livelihood of individuals, the community and the society in general. For Ethiopian Airlines, business means creating a better world for organizations in Canada to be donated for Ethiopian school children. the society as well. The following were some of such activities undertaken by Ethiopian during the year. Hannah’s aspiration to collect the pencils has mounted after she visited her home land Ethiopia for the first time in 2006 where she noticed children without pencils. She flashes back the moment as “I managed to have a friend in Ethiopian Carries Humanitarian Goods on its 777-200LR Delivery Flights hometown country, Axum. And while I was about to get back to Canada, the need rouse to exchange address with my new friend to become pen pals where faraway friends enabled to talk regardless of any distance or time. But I’ve Ethiopian transported much needed anesthesia equipment for the Black Lion Hospital and learnt that she doesn’t have a pencil to write my address. This bothered me a humanitarian goods like books and medical supplies for other three nonprofit Hannah while visiting Ethiopian to thank for the support lot, something as plain as a pencil was hindering me to last my friendship long”. organizations. The goods were transported to Ethiopia by the newly delivered four 777-200LRs between November 2010 and April 2011. The project involved more than six Her ambition to reach the needy children became a reality in 2007 by donating 25,000 pencils in Axum, Mekele, Adwa and Adigudom. And tons of books and medical supplies in collaboration with the Boeing Company, Seattle now she multiplies the donation to 400,000 and Ethiopian was her right hand to freely transport the pencils to Ethiopia and offered two tickets for herself and her father. Hannah thanked Ethiopian and said “Giving comes from the heart…giving from the heart avoids all barriers, Anesthesia Outreach (SAO), Ethiopian Historic Conservation Council and Sunshine be it money, time, or sacrifice. And Ethiopian Airlines has such a heart. It was my first flight of choice and it will always be”. She was invited Construction Philanthropic Foundation. by Ethiopia’s Deputy Prime Minister, H.E. Ato Hailemariam Dessalegn, as guest speaker at the Renaissance Dam fundraising event on August 2, 2011. Besides she is nominated as UNICEF Child Ambassador on empowering children for the coming September, 2011.