Libyan state airlines to merge ahead of sell-off

25 July 2008
Tripoli plans to streamline flag carriers into single, profitable business to attract international investors.

Libya is to merge its two national carriers, Libyan Airlines and Afriqiyah Airways, by as early as 2009 before privatising the new company, executives at the two airlines tell MEED.

Tripoli is keen to simplify the management and operations of the businesses by removing the peculiarity of having two national airlines.

Following the merger, Libya will steadily privatise the nation’s aviation assets, a move it hopes to complete within five years.

The plans are at least partly dependent on the global aviation market improving and the merger producing a profitable airline that is attractive to investors.

“The evaluation of each company’s business is already under way and the merger of the two airlines will definitely take place in the very near future,” says Mohammed el-Meshkhy, director of international operations at Afriqiyah. “We expect it to happen next year.”

The two airlines are both under the management of the state-owned Libyan African Aviation Holding Company (LAAHC), along with the national maintenance, catering and ground-handling businesses.

“The shareholders have decided it is simplest to have a single airline,” says Taffiq Tajouri, international affairs director at Libyan. “We code-share with Afriqiyah already, so it makes sense to merge.”

Libyan, the older carrier, has struggled under US-led sanctions in recent decades, and although Tripoli has ordered $2bn worth of aircraft for the company, it still relies on financial support from the LAAHC.

Launched in 2001, with newer aircraft, IT and infrastructure, Afriqiyah is the more stable operation.

It also has a substantial order for new aircraft from Airbus. Sources expect Libyan to be folded into its younger sibling when the merger takes place.

“There are lots of technical issues to be sorted out, such as how the management will be merged,” says El-Meshkhy.

“We do not know yet if there will be a new name for the airline, but we expect Libyan to be folded into Afriqiyah because it is the stronger business. Libyan has struggled ever since the [US] embargo.

It collapsed for almost 10 years and even though it has new planes on order, it needs restructuring.”

With the merger complete, the government would then be free to push ahead with the intended privatisation of its aviation businesses, starting with the maintenance, catering and ground-handling divisions, and concluding with the new airline.

The entire process could be completed within five years, by which time deliveries of new planes would be well under way. Libyan and Afriqiyah both have ambitions to expand into the international, long-haul market.

“Our planes begin to be delivered from 2011 and we want to begin operating to the Far East as soon as possible,” says Tajouri.

“We are also looking for a code-sharing agreement with a European airline with links to the US. We will see if we can launch direct flights to the US, but it will not happen in the short term.”

Tripoli is also pouring billions of dollars into the country’s airport infrastructure, including the $1.3bn redevelopment of Tripoli International Airport.

The first phase of work on a new terminal will be completed in late 2007, and the site will be able to cater for 6 million passengers a year.

The country is keen to compete with Mor-occo and Tunisia as a gateway hub between Africa and Europe, serving the huge market in expatriate traffic between the two continents. “We are rebuilding but we have a long way to go,” says Tajouri.

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