Ethiopian Eyes Bigger on Cargo as Costs Outrun Record Revenue

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The Ethiopian Airlines Group (EAG) will take delivery of eight Boeing 777 and Airbus A350 next week, the clearest sign yet that Africa's largest Carrier is doubling down on cargo.

It does so at a tough moment for the aviation industry. Revenue is colliding with a faster climb in costs. The bet is straightforward. More aircraft in the air amounts more capacity to sell.

Yet the Airline's own numbers show the question shifting under its feet, from how fast it can grow to whether that growth still pays. Cargo gives the Airline reason for confidence.

According to Adamu Tadele, chief financial officer (CFO), the Airline bought the aircraft to lift the segment's revenue-generating capacity. The purchase targets to strengthen its hand in a market growing fast enough to reward extra capacity.

The cargo segment moved 897,000tn last year, a gain of 16pc that beat its own target by two percentage points in the 2025/26 fiscal year.

Drawing from planemakers gives Ethiopian a complementary fleet.

The Boeing 777 Freighter has become an industry standard for long-haul cargo. It suits high-payload work, carrying high-value cargo, pharmaceuticals, perishables and e-commerce between Africa, Europe, Asia and North America. It offers range, reliability and a lower cost a tonne than many older freighters.

The Airbus A350, built with composite materials and new-generation engines, points further ahead. It promises better fuel efficiency, lower emissions and stronger operating economics. As environmental rules tighten, the Airline expects the aircraft to hold down operating costs and keep it competitive.

The fleet expansion arrives as growth runs into a wall of rising costs and geopolitical shocks. Revenue reached a record 9.1 billion dollars, up by 20pc. Expenses climbed by 25pc. The first nine months were strong, while the final quarter was not.

War in the Middle East closed several countries' airspace, while Ethiopian suspended service to about 10 cities. Security problems in the Red Sea nearly severed its fuel supply chain. The disruption tracked a wider shock.

The war cut Strait of Hormuz shipping sharply and pushed crude prices higher through the middle of 2026 before they eased, feeding straight into a fuel bill the Airline meets almost entirely from imports.

To keep flying, the Airline rerouted fuel through neighbouring countries, at a steep cost. Fuel now takes between 40pc and 56pc of total operating costs, in addition to an annual carbon tax of six million dollars paid to the European Union (EU).

"Expenses increased at a higher rate than income," Mesfin Tassew, chief executive officer of the Group, told journalists last week, presenting the Airline's annual performance at Skylight, a property part of the Group, on Africa Avenue (Bole Road).

According to Mesfin, the Carrier would not post a loss, though preliminary figures signalled net profit may fall short of the previous year.

“Year-on-year profit was expected to stay nearly level with last year's,” Mesfin said.

For Hailegebriel Tadese Seboka, an African aviation strategy expert and former area manager for Ethiopian, the high-growth model remains sound because revenue flows from cargo business, maintenance and repair, and training. He argued, though, that the Airline's focus has to evolve as costs outrun income.

"Revenue is a measure of growth, profitability is a measure of sustainability," Hailegebriel said.

In a volatile market, he argued, top-line growth alone cannot measure success. He sees cost discipline, operational efficiency and strategic staying power as turning critical as regional conflicts and airspace closures reshape airline economics.

According to Hailegebriel, lifting revenue will take an integrated logistics network in which modern airports, efficient customs and digital supply chains work as one.

Africa's air cargo still faces structural drag. Regional manufacturing is limited, cold-chain logistics underdeveloped, and customs slow enough to affect time-sensitive shipments. Weak road and rail links to major hubs choke the flow of goods from factory to global market.

“The result is a persistent gap between how much the Airline flies and how much it earns for it, said Hailegebriel, urging Ethiopian executives to close the gap between volume and revenue by moving toward higher-yield freight.

Hailegebriel believes that partnerships with global logistics firms and dedicated e-commerce distribution could win segments that pay more than standard freight. The African Continental Free Trade Area (AfCFTA) could help ease trade barriers and draw manufacturing and supply chains into the region.

"Ethiopian Airlines is already well-positioned to capture this growth," Hailegebriel told Fortune, pointing to the growing freighter fleet and the Airline's logistics hub in Addis Abeba. “Those assets could link African production centres to new consumer markets on the continent and beyond.”

The longer game runs through Bishoftu, Debrezeit, 45Km southeast of Addis Abeba. The mega-airport there anchors the Group’s Vision 2035 strategy, its first phase designed for 60 million passengers. The deadline for bidders to file technical and financial proposals has been pushed from August to January 29. According to Mesfin, the extension came at the request of international contractors.

"This is a project of massive magnitude," Mesfin said. “Bidders needed more time to consult subcontractors and line up potential lenders before finalising offers.”

Despite the six-month slip, Mesfin hoped that the change would not move the project's completion date or overall schedule. According to Mesfin, large infrastructure projects build in contingencies that allow procurement to shift without affecting final delivery.

The Airline is seeking about 500 million dollars, with further interest from JP Morgan and lenders in the United States, Europe and China. Final loan approvals are expected by March 2027. The Group had secured a financing pledge of 8.5 billion dollars, through the African Development Bank (AfDB), the lead financial mobiliser.

Work has pressed on at the Bishoftu site since the foundation stone was laid in January. Land-levelling is underway, due for completion by the end of the next fiscal year, while the resettlement of local farmers is reported to be largely done.

“The momentum now depends on registering the Special Purpose Vehicle (SPV) under Ethiopian Investment Holdings,” Hailegebrel cautioned. “The SPV is more than an administrative requirement. It’s the legal and financial foundation of the project."

Hailegabriel described it as the engine through which the Airlines can secure foreign financing, sign engineering contracts and manage project governance.

“The bid extension is manageable,” Hailegebrel said, “but a drawn-out delay in registering the SPV could jam financial close and mobilisation.”

He recommended it run with commercial independence and a strong risk-management framework, to hold lenders' confidence and meet international infrastructure-financing norms.

The Ethiopian Airlines Group is planning for 10 billion dollars in revenue in the coming year. Reaching it will depend on turning fast expansion into steady cash and higher returns on the capital it has sunk.

"Ethiopian Airlines has demonstrated its ability to grow," Hailegebriel said. "But the next phase of its success will depend on protecting margins while continuing to invest in its long-term strategic vision."

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