Ethiopian Airlines Pushes Mega-Airport Plan While Keeping Debt in Check

Apr 10 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Ethiopian Airlines is aligning infrastructure expansion with financial discipline through its Bishoftu Airport project. Designed to handle up to 110 million passengers, the development hinges on phased execution and diversified financing. Early works are internally funded, while external debt is being mobilised across global lenders.

Ethiopian Airlines Group is positioning Phase Two of the Bishoftu International Airport as a decisive second leap in a long-term aviation expansion strategy, with the next stage expected to begin two to four years after the completion of Phase One. The full development is now estimated at 21 billion dollars, underscoring the scale of what is being designed as a multi-phase aviation and commercial hub.

Phase One of the project introduces two runways and a passenger handling capacity of 60 million, while the second phase is designed to double that infrastructure with two additional runways, pushing total capacity to around 110 million passengers. The expansion reflects a staged growth model that aligns capacity increases with financial readiness and global lending conditions.

According to the Chief Commercial Officer, Lemma Yadecha, the airline intends to proceed with Phase Two immediately after Phase One, though timing will remain flexible depending on repayment capacity and access to financing.

“It might not be right to take another loan without paying this one,” he told Fortune.

He noted that while the expansion pipeline is clear, execution will depend on whether financial conditions allow continuous borrowing or require a two-to-four-year gap between phases.

Bole International Airport, already operating at its 20 million passenger limit, is expected to gradually hand over international operations to Bishoftu, located about 45 kilometres from Addis Abeba. By June 2025, nearly 20 million passengers are expected to be processed, with a longer-term shift placing Bole primarily in a domestic and VIP role by 2030.

The 12.5 billion dollar core project is structured through a Special Purpose Company owned by Ethiopian Airlines, with a 70pc debt and 30pc equity model. Early works worth 700 million dollars are being financed internally to support site preparation before external funding is fully mobilised.

Financing discussions are already underway across multiple channels, including contractor-backed loans, bilateral government-to-government arrangements, and direct negotiations with lenders in Italy, China, and other regions. Expressions of interest are already valued in the billions, while the Ministry of Finance is supporting sovereign-linked financing arrangements.

A second capital raise is also under consideration to align with international financing standards as the project scales.

Beyond aviation infrastructure, Lemma disclosed that the project will include two Skylight Hotels, one inside the airport and another outside the terminal zone. The in-airport hotel is expected to exceed 320 beds, while the external facility is projected to surpass the capacity of the existing Addis Abeba Skylight Hotel, which currently has 1,024 rooms and suites plus an additional 97-room in-terminal facility at Bole.

“We are not just building an airport, we are building an airport city,” he said.

The surrounding development will include hotels, shopping malls, tourism centres, and institutional offices for Ethiopian Airlines, the Ethiopian Civil Aviation Authority, Ethiopian Airports Enterprise, and partner organisations. All associated costs are embedded within the broader project envelope.

The Ethiopian Airlines Group (EAG) has already shortlisted contractors for major components of the Bishoftu project. Chinese firms remain highly competitive, but interest has also been recorded from Europe, the United States, the Middle East, Africa, and Asia.

The project packages cover Main Facilities, Support Facilities, Airfield & Infrastructure, and Offsite Links. The procurement strategy is designed to balance Chinese dominance with broader international participation and technical diversification.

Government-to-government financing is also being used alongside traditional contractor bidding to strengthen delivery capacity and financing access.

The project’s financing plan includes a diversified debt mix of 1.8 billion dollars from multilateral development banks, 4.4 billion dollars from export credit agencies, and 800 million dollars from commercial banks, private debt, and blended finance sources.

Together, this forms an estimated seven billion dollar structured debt package. Financial modelling indicates that the project can meet debt service obligations and loan life coverage ratios under multiple scenarios.

Repayment is expected to be completed within 10 to 12 years after operations begin.

To protect Ethiopian Airlines’ balance sheet, the entire structure is housed under a Special Purpose Company responsible for construction, debt management, and eventual operations until obligations are cleared.

The expansion is being anchored on strong long-term demand projections. African airlines recorded a 4.8pc year-on-year rise in passenger demand in February 2026, alongside a 6.6pc increase in capacity.

Globally, the International Air Transport Association(IATA) projects that passenger traffic will more than double by 2050, reaching 20.8 trillion revenue passenger kilometres under mid-range forecasts.

Ethiopian Airlines itself is targeting 30 billion dollars in revenue by 2040, with Bishoftu Airport serving as a central driver of that growth. The airline has also ordered 117 aircraft to expand capacity and connectivity.

Cargo volumes, currently at 850,000 tonnes handled by 18 aircraft, are expected to double, with additional freighter aircraft planned in the coming years. Domestic connectivity is also projected to expand from 23 to 47 airports, reinforcing the network effect.

Bole currently handles close to 20 million passengers annually against a capacity of 25 million. A significant share of this traffic is transit-based, positioning the country as a growing global transfer hub.

Plans are underway to introduce a seven-day visa-free transit policy to boost stopover tourism, aligning with broader ambitions linked to the African Continental Free Trade Area (AfCFTA)and Addis Abeba’s role as a continental conference hub.

Investment advisor Mered B. Fikereyohannes said the phased structure provides a critical financial buffer, allowing Phase One to generate revenue before additional borrowing is undertaken.

He noted that the SPV model is backed by approximately three billion dollars in equity and secured against land and early-stage investments, including 500 million dollars already deployed for compensation and site works.

He projected that Phase One alone could generate up to 32 billion dollars in revenue under full operations, with potential to reach 40 billion dollars depending on performance. Long-term group revenues could ultimately rise to between 70 billion and 80 billion dollars.

Mered also pointed to Ethiopia’s geographic advantage, citing the “eight-hour reach” across Africa as a key driver of hub competitiveness comparable to global transit centres.

He noted that the airlines’ track record of self-financed expansion gives the current project a structural advantage, even as it represents the group’s most capital-intensive leap yet.

PUBLISHED ON Apr 10,2026 [ VOL 27 , NO 1354]