Ethiopian Airlines to finance 20 percent of costs out of pocket

The African Development Bank (AfDB) is set to lead efforts to raise USD 7.8 billion for the construction of a new international airport in Ethiopia, according to a formal announcement made this week.

A formal financing agreement between Prime Minister Abiy Ahmed (PhD) and AfDB outgoing President Akinwumi Adesina is scheduled to be signed on Monday, August 11, 2025. The deal will mark a major milestone in Ethiopia’s longstanding efforts to build a new hub for its state-owned flag carrier, Ethiopian Airlines Group.

With the capacity to serve up to 100 million passengers annually, the Bishoftu International Airport slated for completion in three years is projected to become the largest on the continent.

The signing of the agreement would mark a major turning point in Ethiopia’s most ambitious aviation infrastructure project to date and the announcement comes over a year after Ethiopian Airlines formally launched the project’s design and financing process.

In August 2024, Ethiopian Airlines CEO Mesfin Tasew signed a design and consultancy contract with Dar Al-Handasah, a Beirut-based engineering firm.

The deal with the firm was finalized at the Ethiopian Skylight Hotel following a restricted international bid process involving 16 companies. The UAE based company, which previously worked on the Skylight Hotel and Bole terminals, was hired to design the 35 square-kilometer ‘Airport City’ near Obosirraa, in the Bishoftu area of Oromia Regional State.

“The cost of the entire project will be determined by the detailed design Dar Al-Handasah is going to hand over,” Mesfin told The Reporter last year, estimating the cost of the first phase alone at USD six billion.

Earlier this week, during a press brief the CEO disclosed that the total cost of the project would be closer to USD 10 billion, with Ethiopian Airlines funding 20 percent from internal sources and the remainder expected from lenders.

The engineering firm’s plans include four parallel runways, aircraft maintenance hangars, cargo and catering centers, an express railway to Addis Ababa, and parking for 270 aircraft. The first phase is set to include two runways and infrastructure to accommodate 60 million passengers annually, well above Bole International’s current 25 million capacity.

A critical component of the airport city project features the resettlement of around 2,500 farming households currently occupying the proposed airport site.

In April 2025, the Ministry of Finance revealed that Ethiopian Airlines had allocated 30 billion Birr to prepare the land for construction, of which 17 billion Birr is earmarked for compensation and development works related to resettlement.

Group CEO Mesfin confirmed the airline had received 740 hectares from the Oromia regional administration for relocation purposes and also that a local firm, K2L, has been contracted to finalize resettlement design by December 2025, after which construction of housing and other basic services will begin. The full relocation process is expected to be completed by the end of 2026.

This week, the CEO disclosed that the resettlement process will be concluded within the next two months.

On the other hand, efforts to secure financing gained momentum in March 2025, when Finance Minister Ahmed Shide and Ethiopian Airlines executives submitted a formal letter of intent to the African Development Bank.

At the time AfDB President Adesina hailed the planned airport city as a “flagship African project” and pledged the Bank’s support in mobilizing funds.

AfDB efforts in leading the mammoth project finance mobilizations is expected to grow its investment portfolio in Ethiopia, which currently stands at USD 1.2 billion across energy, agriculture, and infrastructure sectors.

Dar Al-Handasah, a partner of Zaha Hadid Architects, is expected to deliver final designs by next year. The company is also assisting Ethiopian Airlines in selecting contractors for the construction phase, which is expected to begin shortly after resettlement concludes in 2026.

The Airline Group envisions the new airport as a centerpiece of Ethiopia’s ambitions to reaffirm its dominance in African aviation.