Ethiopian Airlines urges govt to triple paid-up capital

Dhaka: Ethiopian Airlines has requested the government to raise its paid up capital to ETB 300 billion, a three-fold increment from the current ETB 100 billion.

The group’s fast-growing asset and transaction volumes have already surpassed the existing threshold, forcing the request for a capital raise.

If approved, Ethiopian Airlines will have the third largest capital, next to the Liability Asset Management Corporation (LAMC), which was established with ETB 570 billion capital in 2021, and Ethio Telecom, which is armed with a paid-up capital of ETB 400 billion.

“We are awaiting the approval very soon,” Mesfin Tassew, the CEO of Ethiopian Airlines, said.

The airline has requested the capital raise mainly in a bid to back the ambitious targets unleashed by the new CEO.

The airline’s assets and the volume of transactions the airline is handling have increased substantially and are already much higher than their current paid up capital.

Ethiopian has generated USD five billion in revenue during the 2021/22 fiscal year.

The other factor behind the new capital raise request is the “debt to equity’ ratio.

“A proportionate debt to equity ratio is essential in a bid for us to get loans. For instance, we are purchasing new aircraft, and when we do so, our loan portfolio increases. Because the aircraft are purchased with credit, it increases our loan stock. Our creditors can also not provide finance for us. So unless the authorized capital is increased, we cannot have the right financial flow,” added Mesfin.

Officials at the Ethiopian Investment Holding (EIH) said the board is evaluating the airline’s request for a capital raise.