March 23, 2021

Egyptair seeks government support as it presses ahead with Africa growth plans


State-owned airline to ask for up to 7bn Egyptian pounds in financial assistance in 2021, CEO says

jEgyptair, one of the oldest airlines in the Middle East, plans to ask the Egyptian government for a loan of 5 to 7 billion Egyptian pounds ($317 million to $445m) this year, joining global carriers in seeking state aid to weather the Covid-19 crisis.

The airline will use the funds to pay employee salaries, foreign loans and aircraft leasing fees, Roshdy Zakaria, chief executive and chairman of Egyptair told reporters on Monday.

The government loan will also bolster the airline’s cash reserves for the year, given its monthly cash burn rate of 500m Egyptian pounds during the pandemic.

“We’re dealing with it and trying to keep surviving and this is with support of our government so we can still continue our operations,' Mr Zakaria said on the sidelines of the Arab Aviation summit in Ras Al Khaimah. 'It’s the worst catastrophe we’ve had in the last few years and I don’t think we will have any other stronger catastrophe as this.'

Governments across the world have extended aid to their national airlines to help them survive the pandemic that has devastated the aviation industry. Direct cash infusions and other measures such as tax relief and loan guarantees are valued at more than $225bn, according to Iata.

State-owned Egyptair received 5bn Egyptian pounds in direct government assistance and state-guaranteed loans last year. As a result, the carrier did not cut employee salaries or slash jobs.

Mr Zakaria said he is optimistic about continued government support this year.

The Cairo-based airline is pressing ahead with its plans to expand in Africa through partnerships with other airlines and governments in the continent as it seeks to tap into new markets.

Egyptair signed a joint venture agreement with Ghana to form a new airline, which will be 75 per cent owned by Egyptair and the remaining 25 per cent will be held by Ghana, Mr Zakaria said.

The new Accra-based airline, likely to be named Air Ghana, will start operations in the “next couple of months” with an initial fleet of four Boeing 737-800s provided by Egyptair, he said. The two parties are currently finalising financial and legal arrangements.

'There’s a need for an airline in Ghana... this will give Egyptair a hub in the middle of Africa so we can add more destinations which we don’t fly to,' he said.

Egyptair is also in talks with Sudan Airways for a potential joint venture, though the carriers have yet to finalise the nature of the partnership.

'To spread in Africa, this is our main goal,' he said. When 'we have a hub somewhere in the middle of Africa, this will give us some chance to reach some destinations we’re not going to now.'

Egyptair is also considering the potential of taking over flights to Israel –routes that are currently serviced by its paper airline Air Sinai, he said.

The carrier is hopeful about a rebound in passenger traffic this year. Its traffic is currently at 45 to 50 per cent of pre-pandemic levels in 2019. Egyptair's target is to reach 75 per cent of 2019 level this year as the Covid-19 vaccination drive accelerates worldwide, Mr Zakaria said.

However, governments must ease travel restrictions, eliminate quarantine measures and collaborate on common standards for the restart of travel, he said.

'The biggest worry is the continuation of the pandemic after the end of this year,' the airline executive said.

Egyptair has no plans to shrink its fleet and will take delivery of six Airbus A321Neos and two Boeing 787 Dreamliners in March 2022.

thenationalnews


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