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You are here: Home Flight News Air News On Ethiopian Airlines Salary Increment Protest & Its CEO Retiring Leaving A Legacy Of Massive Development.
Air News On Ethiopian Airlines Salary Increment Protest & Its CEO Retiring Leaving A Legacy Of Massive Development. Print
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Girma Wake assumed duties as Ethiopian Airlines chief executive officer at a time when the carrier was not included in the top airlines list even in the Middle East and Africa region.

Now after nearly seven years as Ethiopians CEO and almost 44 years service with the carrier, he is retiring having lifted the airline out of the red to becoming the 16th most profitable airline in the world.

To add to this achievement, the country’s flag carrier is today also listed as one of the top in the Africa and Middle East region.

Typically Wake denies that it is not all his doing, but rather it is”…the team as whole which has performed well,” he said.

He retired at the beginning of January handing over the CEO position to Tewolde Gebremariam, who had been his deputy for some time.

Speaking of his management teams achievement, Wake said on the eve of his retirement: “The two major things we have done as a team are, firstly: we have made people believe that this airline can grow. We were satisfied in the past with four to five percent industry average growth. Now in the past five or six years we have been growing at the rate of over 20% per year.

“Secondly, there has been a change in mentality. Previously, the airlines executives believed that cutting costs meant keeping staff salary at the minimum. And if you paid more you would lose. That kind of thinking was there for many years.

“Ethiopian airlines increased salaries in the last five years almost every year except one. Even in that one year the normal regular annual increment was given and the company did not lose. In fact, the company became more profitable as the staff increased their effort and productivity.

“I think the mind set that by keeping salary low the airline would grow is not now in minds of the board and the management of the airline. Now the mind set is that the staff and the airline can grow together, “Wake said.

“We believe that the staff contribution will improve when they are treated well. And one of the means of treating them well is by paying them well. Still our salary scale is not up to international standard. But the plan is to make it equivalent to the international standard.”

But despite Wakes statement, some of the airlines personnel are not satisfied and are protesting about the disparity in the last wage increases.

Dream liner Delay

Wake believes that the airlines management achieved in almost all parameters. However, the delay in the delivery of the 10 Dream liner aircraft the airline ordered in February 2005, affected the airlines growth plan.

“If it was not for the aircraft we ordered being delayed, we would have grown much more that we did. The first Dream liner was scheduled for delivery 2008.

“Our growth would have been much better that what we see today. Even though our growth rate is much greater than the industry average, yes there were opportunities that could have been exploited had we received the aircraft on time,” he said.

Wake is optimistic about the airlines growth plan. He said that within the next five years Ethiopian would have around 62 passenger and cargo aircraft and within that period he forecast that the airlines revenue would increase to us$ 3,5-billion from current $ 300-million by then from the current $120-million .Simultaneously, the staff number would increase by at least 30 to 40%.

“By then, the company will include an international airline, a domestic airline, a cargo airline, catering services, ground handling, an aviation academy and each one of these business units will double output both in terms of revenue and profit. I believe by 2015 we will have an integrated group of companies in Ethiopia Airlines that will be running profitably,” the retiring CEO forecast.

Wake said the Gulf carriers operation into Africa was major competition for Ethiopian from outside the continent, with Kenya Airways being its main competitor within Africa. “The biggest competition that we see now is the growth of route networks by Gulf carriers,” he said.

The worst moment for Wake during his 44 years service with Ethiopian Airlines was January 25 last year-the date on which one of the airlines Boeing 737-800s crashed near Beirut.

“The accident in Beirut and the period that followed that day was the worst time in my career with the airline. I don’t think we have yet got over it; it is still with us. That was the saddest moment and certainly the most difficult moment during my service to Ethiopian as CEO.”

Vision 2025

The management of Ethiopian last year announced the development of a new 15-year development strategy dubbed “Vision 2025”.

The main objective of Vision 2025 is to transform Ethiopian as a big aviation group that includes a mega airline serving international destinations. This airline will expand its routes and will have seven-billion dollar annual revenue by 2025 by which time it will be operating at least 70 passenger jetliners.

Currently Ethiopian has a total of 42 aircraft (passenger and cargo) of which 32 are jets that it uses for international flights. By 2015 the number of international destinations will increase to 92 from the current 58 and it will be carrying 13-million passengers.Today, the airlines passenger total is over three-million.

Based on the Vision 2025 plan, Ethiopian will have another airline that will serve domestic and regional destinations. Ethiopian now has 16 domestic destinations and this will increase to 26.The domestic airline will connect local destinations with cities in neighbouring countries. This airline will have four-to five –million passengers, annual revenue of US$1, 4-billion dollars and will have nine aircraft.

The cargo airline will have 15 aircraft and will boost the cargo business between Africa and other parts of the world. The aviation academy, ground handling, catering service, the maintenance and engineering depart-ment will be run as separate business units that provide services to Ethiopian as well as other international airlines.

All these companies will have, as a group, an annual revenue of $9,5-billion dollars and a profit of one-billion dollars. The number of employees is expected to reach 20000 during the period.

Ethiopian is planning to build new facilities, the first being a catering facility being established with LSG of Lufthansa which will be operational within two years.

The airline is also in the process of building a new maintenance hangar.”Wee are acquiring new aircraft (40 on order) and we hope to boost third party business in the maintenance service. But our three hangars are already crowded. So we need a new one. We have prepared a bid document and we will soon float the tender. We hope to finalize the construction within three years,” said Wake.

In addition, the management and board of directors of Ethiopian have approved budget for the construction of a new cargo terminal and a five star hotel, which the management believes that will alleviate the problems of accommodation for transit passengers. The management has awarded the hotel construction project to a Chinese firm.

The airline recently embarked on a staff residence construction project. It has contracted another Chinese firm that is constructing more than 2000 houses for Ethiopian employees in Addis Ababa.

The airline is also expanding the aviation academy.”We are constructing new buildings for dormitories and auditorium. We have secured a 30-million euro loan for the aviation academy expansion project and we bought the trainer aircraft.” The airline is also negotiating the purchase of simulators for the Q400 and B787 aircraft.

Salary Increment Provokes Protest

Employees of Ethiopian Airlines have protested against the recent salary increment to all staff members,

At the annual staff meeting held recently, some employees said that the amount of increment was not even. The management made a 100 to 180% increment to cockpit crew last September, and in November a 15 to 35% increase to other employees, the highest amount going to aircraft technicians.

Employees told the airlines management and the board members that the increment was not as much as had been anticipated adding that it was “unfair” Syoum Mesfin,board chairman of the airline attended the meeting that lasted almost four hours.

Some technicians complained that pilots received more than a 100% increment while technicians received only a 35% increment.

Employees from marketing and other departments have also complained. These employees received a 15% increment. Some years back dozens of Ethiopian pilots left to join the mega carriers in the Middle East which are backed by Islamic financing. In recent years Ethiopian managed to significantly reduce the exodus of pilots by making successive salary increments.

However, it seems it is now the turn for the technicians who are migrating to the Middle East in large numbers.

The outgoing Ethiopian CEO, Girma Wake, said that the management made salary increment to all its employees in the past five consecutive years adding that management was trying its best to make employees of the airline happy.

According to him the airline ordered 40 state of the art new aircraft and the airline should pay for these new jetliners on a regular basis. Wake said the airline would make salary increments based on the financial status of the company.

The outgoing chief executive officer Ethiopian airlines has very good strategic plans including the Vision 2025 which is really interesting but having said that the employees have to be kept happy by increasing their salaries every year still there is a discrimination in the airlines salaries. Human factor in any business has also to be considered in all aspects of growth or else the airline will lose experienced employees to their competitor as it has been said in this article thus also reducing on productivity, quality, reliability and efficiency.

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