In a press conference held on Tuesday, Ethiopian Airlines Group CEO Mesfin Tassew disclosed the losses while presenting the company’s annual financial report.
The candid admission was part of a broader discussion on operational costs, pricing strategies, and strained cross-border financial relations, issues that hit close to home for millions of domestic travellers.
“While international ticket fares are calculated in U.S. dollars and automatically adjusted with the daily exchange rate, domestic flights are priced in Ethiopian Birr,” said Mesfin.
“We didn’t raise the local fares in response to last year’s macroeconomic reforms, even though the exchange rate doubled.”
This decision, made in the interest of price stability and passenger affordability, ultimately backfired. With most of the airline’s key expenses, including aircraft procurement, spare parts, leasing fees, and fuel, pegged to the dollar, the imbalance quickly became unsustainable.
Despite the financial strain, Mesfin said the airline chose to absorb the burden to keep domestic travel accessible. But now, fare adjustments appear inevitable.
“We can no longer afford to continue operating at a loss. Gradual fare increases are being considered to ensure we cover costs while remaining fair to our customers.”
The CEO pointed to religious holidays like Qulubi Gabriel as specific examples of inefficiency. During such peak travel periods, flights to regional cities are full on outbound journeys but often return empty.
“On holidays, we sometimes run 20 flights a day to serve pilgrims. The planes leave packed but return without passengers. This has a real impact on costs,” he explained.
“We’re planning to adjust return flight fares during such times to balance the load and reduce losses.”
In addition to the domestic challenges, Mesfin shed light on a diplomatic and financial hurdle: millions of dollars in revenue stranded in Eritrea.
According to the CEO, Eritrean authorities have blocked the repatriation of earnings from ticket sales, creating a long-standing issue with no resolution in sight.
“We’ve tried legal measures to release the funds, but so far, they’ve failed. Ultimately, it’s a political matter now,” he said.
While the airline has halted direct flights to Eritrea, it continues to use Eritrean and sometimes Sudanese airspace for other international operations. “There is no problem with airspace use, only with financial transactions,” Mesfin clarified.
Despite these headwinds, Ethiopian Airlines remains a dominant force in Africa’s aviation sector. Its ability to operate across challenging political, economic, and geographic conditions speaks to a legacy of resilience.
As Mesfin wrapped up the conference, his message was clear: Ethiopian Airlines may be facing turbulence, but it continues to chart its course with discipline, transparency, and the long-term interest of the nation in mind.