Ethiopian Airlines and the African Development Bank (AfDB) have signed a letter of intent (LOI) to finance the construction of a multibillion-dollar airport in Abusera, 40 kilometres south of Addis Ababa.

The project aims to solidify Ethiopian Airlines' status as Africa’s largest carrier, while reinforcing Addis Ababa’s position as a key aviation hub.

The new Abusera International Airport, estimated to cost $7.8 billion, is expected to reduce congestion at Bole International Airport, which is nearing its annual capacity of 25 million passengers.

Ethiopia last year signed an agreement with Dubai-based engineering and consulting firm Sidara to design the new four-runway airport, which will have a capacity of 100 million passengers a year and parking for 270 aircraft.

Read: Ethiopian Airlines signs deal for design of 'biggest airport in Africa'The project is also seen as a driver of regional economic growth and a crucial step in the airline’s ambitious 2035 strategy, which focuses on network expansion, infrastructure development and investment in human capital.

The letter of intent was signed in Abidjan on March 14 by Ethiopian Airlines CEO Mesfin Tasew Bekele and AfDB Vice President for Regional Development, Integration, and Business Delivery Nnenna Nwabufo.

The LOI is often a non-binding document that outlines the understanding between two or more parties with the intention of formalising it into legally binding agreement. The document, which is equivalent to a memorandum of understanding (MoU), is often written to initiate a business transaction and helps to define expectations with customers, partners and vendors prior to a binding agreement.“Today’s signing of the Letter of Intent for the new mega airport development project is yet another testament to AfDB’s commitment to supporting Ethiopia’s ambitious flagship air transport project that will not only reinforce Ethiopian Airlines’ competitive edge in passenger and cargo services, but also enhance Africa’s global air connectivity and integration, solidifying the continent’s aviation hub status,” Ethiopian Finance minister Ahmed Shide said.

The AfDB said it views regional transport as critical to enhancing trade and mobility across Africa and has identified it as a key pillar of its regional integration agenda, alongside food and energy security and a transition to cleaner energy.“The African Development Bank is fully committed to supporting this transformative flagship project, which will strengthen the continent’s aviation leadership and economic integration,” said Akinwumi Adesina, President of the AfDB.

Located in Bishoftu, the airport will complement Bole and bolster Ethiopian Airlines’ ability to expand its intra-Africa network and global reach.

Ethiopian Airlines reported a record revenue of $7.02 billion in the last fiscal year ending June 30, 2024, a 14 percent increase over the previous year. The airline transported 17.1 million passengers, with 13.4 million on international routes and 3.7 million domestically.

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