View From Arada | Jun 21,2025
Ethiopian Airlines Group (EAG) has moved to structure the railway and transport component of the planned Bishoftu International Airport under a project-finance model, separating it from the airport’s core construction as it seeks to unlock funding for one of the largest infrastructure schemes in the country.
According to Adamu Tadelle, chief financial officer, several letters of intent have been submitted, and prospective partners are reviewing contract documents. The Group is prepared to accommodate multiple financing options for the transport component, which is intended to serve passengers and employees, many of whom commute from Addis Abeba.
“The project is seen as different parts even though they are in the same project,” Adamu told Fortune.
The distinction lies at the heart of the Group’s financing logic. While the airport itself is being advanced through specialised aviation contractors, the railway and associated mobility systems are being packaged separately, with promoters hoping this will widen the pool of financiers and technical partners.
Of the project’s estimated 12.5 billion dollar cost, 954 million dollars is allocated to the transport segment. The wider development includes two parallel runways, an automated passenger mover, and tunnels.
The new airport is designed to be linked directly to Bole International Airport through dedicated road and rail connections, forming what Ethiopian Airlines executives described as a two-airport system. The development spans 35SqKm of freehold land, with an additional 2.84SqKm secured for future expansion.
According to project officials, the rail system, access roads, depot, and passenger and cargo stations at Bole are all being bundled into a single engineering, procurement and construction (EPC) contract.
London-based Clyde & Co. has been hired as legal advisor. The firm is tasked with helping establish the special purpose vehicle (SPV) company, which will anchor the financing structure, while also overseeing regulatory compliance, legal due diligence, and the negotiations of financing and project agreements. It is hired to coordinate with financiers and other advisors to align risk allocation and the broader legal framework.
According to Adamu, the SPC needs to be established quickly, given that the financing model depends on it.
Construction procurement has been divided into five packages. An early-works contract worth an estimated 700 million dollars will initially be financed through Ethiopian Airlines equity and refinanced at financial close. Four other packages will cover infrastructure, main and support facilities, and specialised systems. The bulk of capital expenditure is expected to be procured through lump-sum turnkey contracts, a structure intended to shift construction and performance risks to contractors and enforce tighter cost and schedule discipline.
The timetable is ambitious. Contractors were to be shortlisted by December 2025 for initial ground works. Initial financing approval was expected by February 2026, followed by bids in early March and contract signing by August 27, 2026. Final financing approval is scheduled for December this year, with full financial close targeted for March next year, following the conclusion of lender and funding agreements.
Operational plans envision Bole International Airport retaining 90pc to 95pc of domestic passenger traffic, while Bishoftu International Airport will handle the balance. Bishoftu is expected to handle all international passenger traffic, particularly international transfer flows, as well as international belly cargo and freighter operations. Bole will remain in operation during the transition to preserve service continuity.
"The project had built-in contingencies," said Adamu, arguing that regional geopolitical tensions, including the Iran-Israel crisis, would not materially affect construction costs.
The project is also beginning to attract attention from foreign financiers. In the past two weeks, Chinese Ambassador to Ethiopia, Chen Hai, and a delegation from the Export-Import Bank of China visited the project site, while Finance Minister Ahmed Shide has discussed possible financing avenues for Bishoftu International Airport, alongside Ethiopia’s debt restructuring under the G20 Common Framework.
Interest has also emerged from Italy. During talks in Rome last week, Giancarlo Giorgetti, Italy’s minister of Economy & Finance, praised Ethiopian Airlines’ performance and expressed readiness to support selected components of the airport through Italian financial institutions. Both sides agreed to open technical discussions involving Ethiopian Airlines, financial experts, and advisors to work out financing structures and modalities.
For some observers, the structure is as consequential as the financing itself.
For Mered Fikireyohannes, an investment consultant at Pragma Plc, the plan reflects a broad management scheme that could improve efficiency, smooth project execution, and strengthen investor confidence. But he warned that human capital may prove the weakest link unless Ethiopian Airlines expands its management bench and offers competitive incentives to retain specialised staff.
PUBLISHED ON
Mar 28,2026 [ VOL
26 , NO
1352]
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