Lenders and travelers stick with Ethiopian Airlines

Financiers, passengers and industry partners are, for now, still backing Ethiopian Airlines’ quest to become Africa’s dominant carrier, despite a March 10 crash that killed 157 people.

The causes of the Flight 302 tragedy will likely take months to establish. While much of the international focus has been on U.S. plane maker Boeing and its 737 MAX 8 jet, the airline’s reputation could also hinge on the results of the investigation.

Although crash inquiries focus on preventing future accidents rather than attributing liability, any findings that the carrier fell short in plane maintenance or piloting could be damaging.

For the present, however, passenger confidence in Ethiopian Airlines, long regarded as one of the most reliable in Africa, has remained steady, according to the company. Cancellation and booking rates are unchanged since the crash, said spokesman Asrat Begashaw.

“We are operating as normal,” he told Reuters. “Our brand is keeping its level, and we are okay.”

Two banking sources with knowledge of the matter said that, barring a major new twist in the investigation with long-term fallout, banks were still comfortable lending to Ethiopian Airlines.

“Ethiopian is a solid company,” said one, an official from an international bank that helped finance the acquisition of some Ethiopian Airlines planes. “No reason to change the way the bank sees its credit risk at this point.”

A vote of confidence from lenders is important for the airline because its years of rapid expansion have largely been financed by international borrowing.

The second source, a top European aviation banker, said Ethiopian Airlines was “a good airline, with a good reputation”.

“So unless it (the crash) is a major problem of piloting or maintenance – and it is far too early to talk about that – they will still have access to financing,” the source added.

The sources declined to be identified because the matters are confidential.

Ethiopian Airlines has borrowed from foreign banks including JP Morgan, ING Capital and Societe Generale over the past decade. It also has outstanding bonds worth US$540 million, though none due until 2024, Refinitiv data shows.

The borrowing helped finance the acquisition of stakes in or establish partnerships with at least four African carriers, establishing hubs to feed traffic into Addis Ababa. Last year, the Ethiopian capital overtook Dubai as the main gateway for long-haul passengers into Africa.