China to extend $500 million USD to Ethiopian Airlines to finance its aircraft purchases

Chinese banks are financing the ongoing construction of Ethiopian’s five- star hotel and new maintenance hangar.  China is not known in the global aviation industry for manufacturing and supplying aircraft for international carriers.   However, the introduction of a new regional jetliner by the Commercial Aircraft Corporation of China (COMAC) was a success.

In 2010, COMAC announced its plan to manufacture a narrow body aircraft with a seat capacity of 158-174.  The regional aircraft, OMAC C919, will be the largest commercial airliner designed and built in China.  The aircraft is currently under development. Its first flight is expected to take place next year, with first deliveries scheduled for 2016.

So far COMAC has won 400 orders for the C919, the mainland’s largest locally produced aircraft intended to compete with the Boeing 737 and Airbus A320 narrow body jetliners.  Aviation experts forecast that COMAC will be a strong competitor of Boeing and Airbus in 20 years’ time.  According to aviation experts, COMAC’s immediate focus is on the domestic market in China but it could break the duopoly by Boeing and Airbus after 20 years.

Sources told The Reporter that COMAC has an interest in selling the C919 to Ethiopian.  When asked if ICBC’s financing could be a sign of Ethiopian interest to buy Chinese made aircrafts, the senior executive said “this is purely a financial facility arrangement.  Aircraft evaluation is done purely on technical consideration by experts, fitness for mission (meeting our network requirement) and fleet commonality for cost consideration.”

Established in 1945, Ethiopian is a national flag carrier that currently serves 80 international destinations across five continents with over 200 daily flights, and using the latest technology aircrafts including B777s and B787s.  ICBC Leasing is the largest bank in the world by total assets and market capitalization. It is one of China’s ‘Big Four’ state-owned commercial banks.

It was founded as a limited company on January 1, 1984. As of March 2010, it has assets worth USD 1.9 trillion, with over 18,000 outlets including 106 overseas branches and agents globally.  In 2013 and 2014, it ranked number 1 on Forbes Global 2000 list of World’s Biggest Public Companies, and number 1 in The Banker’s Top 1000 World Banks ranking – the first time ever for a Chinese bank.

Source: The Reporter