Middle East Airlines: No take off in profit would be positive

Published November 12th, 2012 - 07:35 GMT
Middle East Airlines boss has said that flat results would be a positive result owing to local and regional instability
Middle East Airlines boss has said that flat results would be a positive result owing to local and regional instability

Middle East Airlines CEO Mohammad Hout said he hoped Lebanon’s flag carrier would post flat profits in 2012 amid a sharp drop in the number of tourists from the GCC.

“All we are aiming for is that our end results [for 2012] will be similar to our results in 2011 ... Up until November, our results are the same as last year’s,” Hout told the National News Agency in an interview published Sunday.

“We also don’t expect bright results in 2013 because of the [political and economic] conditions in Lebanon and the sharp decline in passengers, particularly from and to the Arab Gulf,” he added.

MEA saw its profits plummeting from over $90 million in 2010 to $40 in 2011 as fuel costs and employee compensations soared.

Hout said 10 new planes would be delivered to MEA between 2018 and 2021 as part of a plan to modernize the company’s fleet of 16 Airbus passenger jets.

Earlier this year the company signed a memorandum of understanding for the purchase of 10 single-aisle passenger planes from Airbus SAS, a leading European manufacturer.

Figures for the deal have not been released, but analysts put the total value at more than $1 billion.

He said two passenger jets have been put up for sale: “Expansion is based on [a future] growth in passengers and is not arbitrary.”

Hout said joining the international alliance SkyTeam has helped boost the company’s revenues.

“It will gradually help improve revenues and we have already started to see improvement. But revenues would improve [more substantially] year by year,” he said.

Asked if he discussed with United States officials the resumption of direct flights to New York, Hout said the issue wasn’t tackled during a recent visit to Washington.

“MEA does not intent to ask the U.S. administration [to resume flights] because we know that this is impossible. The reasons that led to the ban are still there, in their opinion,” Hout said.

“All we hope for is that the rating of the Rafik Hariri Beirut Airport remains positive and that MEA remains capable to do business in the United States [including] making alliances with U.S. operators,” he added.

Asked about plans to expand MEA destinations, Hout said the company is mulling flights to Najaf and Basra in Iraq to accommodate Shiite religious pilgrims. But he said amendments to a Lebanese-Iraqi agreement are needed beforehand.

Asked if a low-cost subsidiary of MEA could see birth anytime soon, Hout said that despite the issue being under study no decision has been made.

He also said that there are no current plans for an initial public offering of shares that has been delayed since 2010.

“I do not think the current conditions will allow an IPO of 25 percent of the company’s shares. This would require both political and financial stability, which is currently unattainable,” he said.

“But we should be realistic. The whole region is on fire and we do see the situation is bad, but it could have been worse.”

Lebanon’s Central Bank, Banque du Liban, is the majority shareholder of MEA and has been firm in its support, Hout said.

 


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