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French Version

MEA reports first profit in quarter-century - Carrier posts $3 million gain (Daily Star)

A restructuring plan and a good tourist season in the summer helped Middle East Airlines record a net profit of $3 million in 2002, its best result in 26 years, MEA chairman Mohammed Hout said Thursday.

Hout added that the final audited 2002 results showed an operating profit of $8 million and $3 million in net profit. “We expect higher profits at the end of the year,” Hout told The Daily Star.

He declined to give any more details. He added that this summer, the company made up for the drop in the number of passengers during the US-led invasion of Iraq last spring.

The March war had an effect on the tourist season in Lebanon. While passengers did not travel during the war, numbers picked up over the summer, as more than 1 million tourists from other Arab countries flocked to Lebanon rather than spend their summers in America or Europe.

All major hotels in Beirut and the mountains reported between 90 percent and 100 percent occupancy in June, July and August. Hout also ruled out the possibility of the carrier’s privatization this year or next, despite its good results. “We do not expect any privatization of MEA in 2004, especially under these circumstances in the country,” he said.

Hout said that if the company continued to show good results over the next few years, investors would be encouraged to invest in the airline.

The government of Prime Minister Rafik Hariri floated the idea of selling MEA three years ago, but economists argued against this idea because at the time, the company was incurring significant losses.

Privatization of state-owned assets is seen as a step in the reduction of the country’s $32 billion public debt. “We are not in a hurry to privatize the carrier. The company is not putting a burden on the government,” Hout said. He said that the company will keep the profits, adding that MEA’s gross revenues in 2002 were $250 million. “The number of passengers rose by almost 10 percent this summer and we hope the results will improve in the future,” Hout said.

In the past, MEA, which is owned by the Central Bank, incurred huge losses due to bad management, overstaffing and the high cost of maintaining offices overseas.

In 1998, the Central Bank appointed Hout chairman of the company in an attempt to cut losses and restore the image of the airline. Hout said that he was able to save $27 million a year after management laid off 1,400 surplus employees three years ago in the face of fierce resistance from unions.

The Central Bank has lost more than $400 million on MEA since it took over the carrier in 1996. In the last few years, the airline has bought six new Airbus aircraft. This year, it leased three others to upgrade the capacity of its fleet. “At present, MEA flies to 25 destinations and we may add new routes if there is a need for it,” Hout said.

Beirut 12-10-2003
Osama Habib
The Daily Star

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