ANNUAL REPORT 2006 - 07 CONTENTS 2 Management Board of Ethiopian Airlines 3 CEO’s Message 4 Management Team 5 News Highlights 12 Finance 24 Glossary 25 Auditors Report & Financial Statements 44 Ethiopian Airlines General Sales Agents 45 Ethiopian Airlines Offices 46 International Route Map 48 Ethiopian Airlines Domestic Offices BOARD OF MANAGEMENT H.E. Mr. Seyoum Mesfin ................................................................................................................Chairman H.E. Mr. Getachew Mengistie ...........................................................................................................Member Mr. Abera Mekonnen ........................................................................................................................Member Col. Semret Medhane .......................................................................................................................Member Capt. Mohammed Ahmed .................................................................................................................Member Mr. Gebremedhin G/Hiwot ................................................................................................................Member Ambassador Dr. Addisalem Balema .................................................................................................Member Major General Alemeshet Degifie ....................................................................................................Member Mr. Reta Melaku ...............................................................................................................................Member Mr. Tewodros Balcha ........................................................................................................................Member Mr. Alemayehu Assefa ......................................................................................................................Member | ETHIOPIAN AIRLINES CEO’s MESSAGE am pleased and proud to report yet another banner year of achieved the highest level of excellence in business and continue high revenue performance and operating profits at Ethiopian to improve the quality of life of the African everywhere. I Airlines. Operating results obtained from both passenger and cargo traffic for the fiscal year 2006/07 netter 198 million In addition, our esteemed and valued customers gave us the birr. Revenues surpassed the 6 billion birr mark for the first time highest ranking in the overall handling of our services. The ever – registering a new record of 6.9 billion birr, a 28 percent services ranked under this programme included the attitude and increase compared to that of the previous year. professionalism of cabin staff, on-time performance, frequent flyer, and pilots’ handling of flight landings and take-offs. The growth in revenue and operating profits was the direct result of a 19 percent increase in the number of passengers flown Despite the persistent financial constraints of the aviation and a 5 percent rise in freight carried. The latter is the second industry during the period under review, Ethiopian continued to highest source of revenue following that of the passengers. meet the aspirations of its customers by expanding its network It is worth noting that the increase in the cargo segment of of destinations and strengthening its frequencies. The additions our business comes from the growing markets of export of Bahrain, Sana’a and Juba brought the total of our international commodities carried out from Addis Ababa. Encouraged by operations to 48. the emergence of these markets from the agricultural sector, it is to be recalled that Ethiopian had taken unprecedented Moreover, our decision to purchase ten all-new 787 Dreamliner cost and investment measures to upgrade an expand its aircraft from Boeing reaffirms Ethiopian’s commitment to cargo facilities and services to meet the needs and demands remain the leader in the African aviation industry and continue of the public and the national economy. to provide our customers with nothing less than the best quality of service and comfort at all times. Revenues secured from other services provided by Ethiopian to other airlines, especially those from aircraft maintenance These are but a few of the strategies underway leading to the and training, contributed appreciably to the financial performance ultimate objectives set forth in our statement of Vision for the of the company. year 2010. We are all the more confident now than ever before that we shall meet the one billion US dollar revenue target with Ethiopian Airlines has also registered milestone successes a modern fleet of 30 jets and 3 million passengers per year. on several other fronts during the fiscal year under review. In recognition of its sustained excellence in financial performance, I would like to take this opportunity to thank our customers, traffic growth, route development, fleet modernization, in-flight employees and other stakeholders for their continued support service and overall customer care, Ethiopian has won awards which has enabled us to begin the next budget year with from the African Aviation Journal and the African Times (USA). In successful results. addition, Ethiopian was the winner of the Africa Business of the Year Award for 2007 at the 15th African Achievement Awards and Africa Day celebration in Beverly Hills, California. The Mr. Girma Wake Africa Business Award recognizes and honours those who have Chief Executive OfficerChief Executive Officer AnnUAL REPort 2006/07 | MANAGEMENT TEAM Mr. Girma Wake Chief Executive Officer Mr. Tewolde Gebre Mariam Mr. Kassim Geresu Mrs. Frehiwot Worku Mr. Kinfe Kahssaye Chief Operating Officer Executive Vice President Executive Vice President Executive Vice President Finance & Strategic Planning Corporate Services Strategic Business Units Mr. Busera Awol Mr. Getachew Tadesse Captain Tesfaye Ambaye Mr. Mesfin Tassew Vice President Commercial Vice President Customer Service Vice President Flight Vice President Operations Maintanace & Engineering Ms. Rahel Zerihun Mr. Samuel Assefa Mrs. Konjit Tedla Mr. Kemeredin Bedru Acting General Counsel Vice President Internal Audit Acting Vice President Human Vice President & Intergrated Management Resource Management Information Technology System Compliance Mr. Meseret Bitew Mr. Abate Gidafe Vice President Finance Vice President Strategic Planning | ETHIOPIAN AIRLINES neWS HIGHLIGHTS The opening of these destinations will definitely increase the passengers’ uplifts, thereby maximizing the revenue Revenue Enhancement generation of the Enterprise. In order to register and increase the generation of revenue, Ethiopian introduced Jet flights to Mekele, Axum and Corporate Social Responsibility Gondar which significantly assisted the tourist flow to Ethiopian has addressed societal issues through various these historic places, thereby contributing the increase in contributions made for the development of society as a revenue. whole. At the same time corporate social responsibility has given Ethiopian an ethical framework and a positive New Destinations Added image. To effectively exploit potential markets, to maximize • In this regard, Ethiopian sponsored United World profitability and to capture the flow of traders and Colleges (UWC), an international NGO in London whose investors; Ethiopian commenced flights to Honorary presidents are Queen Noor of Jordan and Nelson • Juba – effective November 16, 2006 Mandela – former president of South Africa. • Sana’a – effective May 14, 2007 • Ethiopian offered five round trip tickets per year for • Bahrain – effective June 3, 2007 qualified candidates to join the global movement college in fiscal year 2006/07. • In addition Ethiopian Airlines organized an annual children’s party in the year 2006/07 contributing to the welfare of the communities and a medical sponsorship for the needy. • Sponsored talk show in the plights of Young Ethiopian Women (Bahrain). AnnUAL REPort 2006/07 | Service Enhancement Management, Fares and Ticketing (e-ticketing), Airport Re-branding Check-in, Interact Graphical User Interface for Reservation Ethiopian Airlines has achieved remarkable and Check-in, Web Internet Booking Engine, Credit Suite accomplishments over the past 60 years and has always Online Credit Card Payment, Customer Insight Customer made sure that it stays at the forefront of African Aviation. Profile Management, Revenue Integrity Management, However, surviving the fierce competition in the aviation Travel Loyalty Management, Load Manager, and Air Price industry and staying at the forefront requires continuous (Pricing Management) systems. improvements in image presentation as well as service ET activated e-ticketing services in line with the IATA delivery. Thus, Ethiopian embarked on a re-branding mandate through ET’s own offices and ET website via the project and a contract was signed between Ethiopian and internet booking engine and also activated GDS e-ticketing branding agency Goslar & Associates. with Amadeus, Galileo, Abacus, Sabre and Worldspan. The first change in the re-branding venture resulted in the Activation of ground handling e-ticketing with Codeco, formation of a new tag line. This new tag line, ‘The New Gaetan and RTM Amadeus was also part of the PMS Spirit of Africa’, was formulated in view of Ethiopian’s project. inspirational leadership role in the continent and beyond. The e-ticketing sales in the month of June 2007 reached Moreover, the new tag line enforces the vision of the 79% for ET’s own offices,