MEA expansion takes off

26 April 2002

National flag carrier Middle East Airlines (MEA)has announced plans to expand its fleet, in response to strong demand for short-haul flights. The purchase of short-range aircraft is expected to help the cash-strapped national carrier fend off competition from international airlines operating in the region.

MEA signed a memorandum of understanding (MoU) on 18 April with Europe's Airbus Industriefor the supply of six A321 jets. The new aircraft will supplement MEA's two existing A321s, which have a total range of 5,550 kilometres and are used primarily on routes between Beirut and the Gulf states. The 150-seat A321s will be delivered by the end of 2003, expanding the MEA fleet to 17 aircraft, all of which are manufactured by Airbus. The total value of the order was not disclosed, but the A321 is normally priced at about $70 million. Airbus would probably agree to a discount for the full complement of aircraft, a spokesman for the Toulouse-based company told MEED on 22 April.

Under an agreement signed in early April, the airline has also arranged to lease from Singapore-based International Lease Finance Corporationthree wide-body Airbus A330-200s, which will be used for long-haul flights. The twin-jet aircraft will be powered by Trent 700 engines supplied by Rolls-Royceof the UK.

MEA is now actively seeking financing for the six A321s, with about 85 per cent of the cost expected to come from foreign banks. 'I don't think we will have a problem in finding banks to finance the deal after the company managed to implement the restructuring plan last year,' MEA chairman Mohammed Hout said on 18 April.

MEA is one of several companies that the government has earmarked for privatisation. The airline recorded losses of $20 million last year, despite the forced redundancy of 1,200 employees as part of an initial restructuring programme. Banque du Liban (central bank), which owns MEA, has agreed to pay more than $100 million in compensation and retirement benefits to staff.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications