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French Version

MEA looks forward to better times airline counts on summer bookings to recoup war-time losses (Daily Star)

National carrier suffering fallout from Iraq conflict, hopes upcoming tourist season will maintain newfound profitability

National carrier Middle East Airlines (MEA) is counting on increased bookings this summer to recoup losses incurred during the war on Iraq, its chairman said Monday. “Our bookings dropped by around 35 percent in March and April,” said MEA chairman Mohammed Hout at a press conference held in the company’s headquarters. “We are counting on the summer bookings to make up for the losses, but the region is in a delicate state.”

The chairman said the company lost money during March and April because it maintained its flights on all routes, including Kuwait, despite the drop in passengers, but he added that bookings in the last two weeks had been better than the same period last year.

In 2002, Hout promised to return the airline to profitability for the first time since the end of the civil war in 1990. MEA turned around $80 million in losses in 1997 to a $5 million operational profit last year and expects operational profits to be at least as high this year.

The airline laid off more than a quarter of its staff in 2001, scrapped unprofitable routes and signed an agreement last year with the Airbus consortium to buy and rent new aircraft. The airline, which currently flies to 24 destinations, is also considering opening a route to Brazil, home to some 9 million Brazilians of Lebanese origin.

The Central Bank of Lebanon owns 99 percent of MEA and is preparing it for privatization, but the crisis in the airline industry following the Sept. 11, 2001 attacks in the United States delayed the planned sell-off. “Middle East Airlines is ready to be privatized, it is only a matter of time,” said Hout, but added that “privatization is unlikely to take place this year or the next due to the global economic recession and steep losses of the airline industry.”

MEA bought six Airbus 321-200 aircraft last year and leased three A330-200s, replacing its old fleet of nine leased aircraft. This was the company’s first fleet upgrade since the onset of the civil war in 1975.

The airline, which cost the Central Bank more than $400 million in losses in the last seven years, financed the aircraft deal through bank loans at 2.8 percent interest. The airline has received eight of the new aircraft this year and the ninth is on the way. The airline will return its last three old leased planes in the next few weeks.

MEA is also interested in lowering operational costs by reducing its fuel bills. Hout said a cartel of fuel companies at Beirut International Airport is increasing the company’s fuel bill and called on the government to intervene and break the cartel. “The firms form a cartel and we call on the Energy Ministry to monitor their prices, which are among the highest in the world,” said Hout, adding that a gallon of fuel in Beirut cost 92.8 cents versus 77 cents per gallon in nearby Larnaca.“We are sending our aircraft to refuel in Cyprus on the way to Paris,” said Hout. “This is an abnormal situation that has to be fixed.”

Beirut 23-06-2003
Dania Saadi
The Daily Star

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