Ethiopian Airlines Forced To Lease Planes Amid Boeing Delivery Delays, Affecting Growth Plans

Ethiopian Airlines, Africa’s largest carrier, is leasing planes to keep up with its ambitious expansion plans due to significant delays in aircraft deliveries from Boeing Co. The Addis Ababa-based airline has been waiting for several months for the arrival of its much-anticipated Boeing 737 Max jets and 777 freighters, creating a ripple effect on its growth strategy.

Boeing Delays and Uncertain Timelines

Over half of Ethiopian Airlines’ fleet is made up of Boeing models. The airline has been facing delivery delays from Boeing since April, with no clear timeline in sight. According to CEO Mesfin Tasew Bekele, Ethiopian Airlines has yet to receive an updated schedule for when the ordered planes will arrive. “We are waiting to hear from them and definitely, late delivery of airplanes will affect our growth plan,” Bekele said in an interview with Bloomberg Television.

To mitigate these disruptions, the airline has decided to lease aircraft. “We didn’t wait for Boeing to deliver the ordered airplanes, and now we are leasing airplanes,” Bekele added. However, the leasing of planes presents its own set of challenges, from increased operational costs to complexities in maintaining a diverse fleet.

Boeing has not responded to requests for comments on the delayed deliveries. The company is currently navigating a tumultuous period characterized by supply chain issues, workforce turnover, and other production-related challenges that have lingered since the COVID-19 pandemic.

Boeing, headquartered in Arlington, Virginia, and its primary competitor, Airbus SE, are both grappling with similar problems. Persistent parts shortages and a high turnover rate among skilled workers have created delays in production and delivery. Boeing’s challenges are further compounded by a looming threat of a strike that could potentially shut down its Seattle-area factories next month, adding another layer of uncertainty for airlines like Ethiopian.

The delays have not only impacted Ethiopian Airlines but have also affected several other airlines globally. Ryanair Holdings Plc, a major customer of Boeing, has repeatedly expressed frustration over the delays, indicating that they may fall short of their annual passenger targets due to the delayed arrival of the 737 Max jets.

Ethiopian Airlines’ Continued Commitment to Boeing

Despite the challenges, Ethiopian Airlines remains committed to Boeing. The airline’s relationship with Boeing was put to the test in 2019, following a fatal crash involving one of its 737 Max models just minutes after takeoff. This crash, which was linked to a faulty design feature later identified in Boeing’s aircraft, led to a worldwide grounding of the 737 Max fleet. However, Ethiopian Airlines continued to place orders with Boeing, underscoring its long-term commitment to the aircraft manufacturer.

Last year, the airline announced plans to modernize its fleet by ordering 11 Boeing 787 Dreamliners and 20 Boeing 737 Max airplanes. These orders are part of Ethiopian Airlines’ strategy to expand its network and enhance its operational efficiency. However, the delivery delays now pose a significant hurdle to this modernization plan.

Future Fleet Expansion Plans

Looking ahead, Ethiopian Airlines plans to receive 16 new aircraft in the current fiscal year, which ends in June 2025. This delivery includes four Airbus A350-1000s, which are scheduled to arrive between October and March. Airbus has provided more concrete delivery timelines, suggesting that Ethiopian Airlines is diversifying its fleet strategy to reduce dependency on a single manufacturer.

On the other hand, Boeing has only tentatively promised to deliver a 777 freighter by September, without providing any specific dates for the 737 Max planes. This lack of clarity from Boeing has forced Ethiopian Airlines to explore alternative solutions, such as leasing, to sustain its growth trajectory.

In a strategic move aimed at strengthening its partnership with Ethiopian Airlines, Boeing is set to open a new office in Addis Ababa in October. This office is expected to enhance collaboration for the joint production of aircraft components, signifying a deepening relationship between the two entities. The new office could potentially provide some respite by ensuring closer coordination and addressing any future delivery issues more swiftly.

Ethiopian Airlines is also aggressively expanding its footprint across Africa. The airline is building on its existing partnerships with operators in Togo, Malawi, and Zambia, further consolidating its position as a leading player in the African aviation market. The expansion strategy is crucial for Ethiopian Airlines as it seeks to dominate Africa’s skies and become a key player in global aviation.

Challenges Ahead for Boeing and Ethiopian Airlines

Boeing’s ongoing challenges are not just limited to Ethiopian Airlines. The delays have prompted a wave of complaints from several global carriers who are increasingly concerned about the impact on their operations and financial performance. For Ethiopian Airlines, the impact is particularly significant given its reliance on Boeing aircraft for its fleet modernization and expansion plans.

The looming threat of a strike at Boeing’s Seattle-area factories further adds to the uncertainties. A strike could halt production, exacerbating the current delivery delays and leading to a backlog of orders. This would inevitably have a cascading effect on airlines worldwide, potentially affecting their operational schedules and financial planning.

The delays in Boeing’s aircraft deliveries have put Ethiopian Airlines in a challenging position, forcing it to lease planes to maintain its growth momentum. While the airline remains committed to Boeing, the ongoing delays and lack of clear timelines are prompting Ethiopian Airlines to diversify its strategy, including increasing its engagement with Airbus.

As Boeing works to stabilize its production lines and mitigate the threat of labor strikes, the coming months will be crucial for both Boeing and Ethiopian Airlines. The ability to navigate these challenges will determine the pace of Ethiopian Airlines’ expansion and its competitive position in the African aviation market.