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French Version

2003 saw national carrier reverse its fortunes (Daily Star)

MEA posts first profit in 20 years; traffic at BIA up
Yet death of 100 in Benin disaster cast shadow on good news at home

The year 2003 began with Lebanon’s national flag carrier, Middle East Airlines (MEA), updating its fleet and posting an operating profit for the first time in 25 years.

However, the year ended tragically, with the crash of a Beirut-bound African plane in Benin killing at least 100 and raising questions about the benefits of an open skies policy that gave foreign airlines the freedom to operate in Lebanon.

MEA, which has posted losses ever since the Central Bank bought 99 percent of its shares in 1996, announced that it had returned to profitability, earning $3 million in 2002. The airline expects to post around $15 million profits for 2003, despite the Iraq war which negatively affected the industry, and around $25 million for 2004.

MEA’s losses have cost the Central Bank more than $450 million since 1996, but in the year 2001 operational losses were slashed after the airline axed more than a quarter of its bloated workforce as part of a restructuring plan that saw the airline scrap unprofitable routes.

MEA took delivery of nine brand-new aircraft this year, and dubbed itself the world’s youngest fleet. Six of these aircraft, bought from the European aviation firm Airbus, are A-321s and the three others, all leased, are A-330s.

The nine planes will give MEA a real opportunity to “reposition Beirut as an important platform for air transport in the region,” said Transportation Minister Najib Mikati.

With the new planes, MEA saw its fleet shrink from four different aircraft types to only two. However, since the A-321 can withhold 149 passengers and the A-330 250 passengers, MEA acquired an additional 93 seats, which could produce an extra $7 million in revenue a year, and the new planes may also reduce operating costs. “Since both aircraft use the same spare parts, the same technology and can be flown by the same pilots, MEA could see itself saving around $4 million per year,” said Patrick Baudis, Airbus’s marketing director for the Middle East.

MEA would also be able to cover an area from Europe to India with Beirut as a central hub, using the A-321, and from Tokyo to Vancouver using the A-330, allowing it to serve far more customers in many different airports.

This was MEA’s first purchase of aircraft in over 25 years, allowing the airline to replace an aging leased fleet that had become increasingly costly to maintain. According to Mikati, the new order of Airbus planes stemmed from on the airline’s technical and commercial needs and was made possible by the personal intervention of French President Jacques Chirac, whom he said helped secure a good price.

Officials would not disclose the price tag for the new planes. According to figures available on the internet, the A-321 costs an estimated $30 million, while the A-330-200 costs $80 million. All that Mikati said was that the planes were bought for 15-20 percent cheaper than if “we bought them before Sept. 11.”

The good financial fortunes of the Lebanese aviation industry were offset by human losses in December, when a Lebanese-owned airline registered in Guinea crashed during take-off in the capital of Benin, Cotonou.

The crash caused controversy over Lebanon’s open skies policy and its safety regulations, particularly as the airline was not allowed to register in Lebanon, but was given the green light to land in Beirut International Airport (BIA).

The open skies policy gives foreign airlines the freedom to carry passengers into, out of and through Beirut International Airport and lifts restrictions on the number of flights.

The policy was adopted in the hope of bringing more tourists to Lebanon, and thus more income, and to help fill BIA, which has the capacity to receive 6 million tourists a year but has not even received half that number.

When the policy was adopted, MEA was not pleased because tough international competition could make a huge dent in its ticket sales. However, the crash of the airline in Benin has ironically cast MEA in a good light and prompted some government officials to demand that the national flag carrier fly to destinations like Benin.

“In response to government requests, we are currently studying the financial feasibility of flying to a number of new destinations,” said MEA Chairman Mohammad al-Hout.

Another destination being discussed is Brazil, which is home to some eight million Lebanese expatriates.

Meanwhile, BIA had clocked up 2.3 million passengers by the end of December, compared to a little more than 2 million in 2002 and 1.7 million in 2001.

This means that passenger numbers have increased by 25 percent in just two years. Numbers of transit passengers are also up, increasing by 35 percent since last year.

Last year was a crucial milestone for the Lebanese aviation industry, mainly because MEA replaced most of its aging fleet and posted profits for the first time in 20 years. However, the industry is still small, with BIA usually only busy during the summer tourist season.

Therefore, Lebanon needs to attract more tourists, and especially more expatriates, to become a regional player. BIA was built to handle 6 million passengers, so there is spare capacity.

Beirut 12-01-2004
Tarek El Zein & Dania Saadi
The Daily Star

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