Shafiq: private sector partnership sought for expansion
CAIRO: Minister of Civil Aviation Ahmed Shafiq announced Sunday preparations are underway to float 20 percent of Egypt Air on the Cairo and Alexandria Stock Exchange later this year. If successful, the company could raise an estimated LE 5 billion to be used for fleet expansion.
Egypt Air commissioned a feasibility study in early 2006 for a possible public offering, but as recently as early December 2006, Shafiq said the time was not suitable for an IPO. Speaking to the Shura Council s Industry and Energy Committee, he said the ministry was prepared to wait for two years, if necessary, for the company to achieve higher growth rates and make for a more attractive stock.
As of press time, neither Shafiq nor Egypt Air Chairman Atef Abdel Hamid were available for comment.
Speaking on Sunday, Shafiq said the company seeks to expand its fleet by an additional 12 aircraft to be purchased next year. Egypt Air now operates 40 aircraft, a mix of Boeing and Airbus jets. In 2005, the company signed a deal worth an estimated $900 million (LE 5.1 billion) for 12 Boeing 737-800s to be delivered by 2009 and bring its fleet to52 aircraft.
Fleet expansion will help the airline deal with the eminent implementation of Open Skies at Cairo International Airport (CIA). Egypt Air now commands more than 60 percent market share of domestic travel. But as the Ministry of Civil Aviation is preparing totransform CIA into a regional hub and fully implement Open Skies, the company is expected to face fierce competition from local and regional low cost carriers.
The IPO announcement falls in line with a list of recent developments implemented at the airline including the launch of its online-booking and cargo-tracking last week and initiation of e-ticketing services on all domestic and some foreign routes in December.
In September, Egypt Air signed a deal worth an estimated $600 million (LE 3.4 billion) for the purchase of six medium range 76-passenger jets from Brazil s Embraer to power its domestic low-cost carrier Express, set to be launched in June, 2007. Combined with the 2005 Boeing deal, the company s aircraft expansion expenditures havetotaled nearly $1.5 billion (LE 8.6 billion) in the past two years.