The government of Ethiopia will grant Somaliland an undisclosed stake in state-owned flag carrier Ethiopian Airlines (ET, Addis Ababa International) as part of a groundbreaking agreement between the two authorities, comprising sea access for Ethiopia and enhanced diplomatic relations.

Redwan Hussein, national-security adviser to Ethiopian Prime Minister Abiy Ahmed, told Bloomberg that negotiations over a formal deal specifying the stake should be concluded within a month.

Abiy and the President of Somaliland, Muse Bihe Abdi, signed a Memorandum of Understanding on January 1, 2024. Ethiopia has secured a 50-year lease of a 20-kilometre stretch of the Gulf of Aden coast to be used for both military and commercial purposes. The exact location has not been named. Somaliland said the agreement also includes formal recognition of the polity, which would be its first. However, the Ethiopian communique only mentions "bolstering political and diplomatic relations" and does not explicitly reference any diplomatic recognition of Somaliland as a sovereign state.

Somaliland, a former British colony which merged with the former Italian colony of Somalia after just five days of independence in 1960, has functioned as a de facto state while pursuing renewed independence since Somalia descended into chaos in the early 1990s. Even though Mogadishu exercises no effective control over Somaliland, a far more stable part of the country, all UN member states continue to recognise Somaliland as part of Somalia.

Mogadishu called the agreement "blatant aggression" and vowed to oppose it.

Ethiopia has not had direct sea access since Eritrea's secession and independence in 1993. Addis Ababa had previously courted Asmara with a similar proposal as that pitched to Somaliland - equity in Ethiopian Airlines in return for access to Eritrea's Red Sea port of Massawa.

Somaliland does not have its own airline. The polity is served by Hargeisa airport, which currently sees 32 weekly scheduled departures with a total of 4,462 scheduled departure seats (including one weekly cargo flight operated by Astral Aviation). The ch-aviation capacities module shows that Ethiopian Airlines is the largest operator at the airport, with a 45.9% weekly market share by scheduled capacity. Despite its contested international status, Hargeisa sees traffic from the United Arab Emirates, Saudi Arabia, and Kenya.

The announced deal will be the first time a foreign government has gained a stake in Ethiopian Airlines, a carrier which is more renowned for taking shareholdings in other African start-up airlines, including ASKY Airlines, Ethiopian Mozambique Airlines, Malawi Airlines, Nigeria Air, Zambia Airways, and Air Congo.