EgyptAir approves second phase of its fleet development plan: Musallam

Ahmed Saad
7 Min Read

Daily News Egypt interviewed Safwat Musallam, the chairperson of EgyptAir Holding Company, where he spoke about the current challenges facing the company and its future ambitions.

EgyptAir is an Egyptian airline established in May 1932. It takes Cairo International Airport as a main point of its operations. The Egyptian government owns EgyptAir entirely. EgyptAir has joined Star Alliance in July 2008; the largest aviation alliance in the world.

What is the company’s plan for next year following its reforms?

We started with the replacement plan, where we purchased nine planes. We have received seven planes so far, and we are expecting to receive the last two by the end of this year. Regarding the second phase, it includes a new deal for 38 planes, however, this deal is still under study and has not yet been confirmed.

The second phase also includes replacing and developing planes according to the fleet development plan put forward by the company so that planes’ would not stay for more than four years. We will be following this through 2022, expecting the number of planes to further increase by 2025.

Within the fleet development plan, which has been approved by the company’s board of directors, EgyptAir is currently looking into a number of offers in the different categories of the fleet (small – medium – large) in order to determine the best alternatives for the implementation of the development plan which includes developing a large number of planes. The study we are carrying out includes assessing planes by different manufacturers, and looking at the best acquisitions to be carried out.

What happens to old planes?

About 25 planes will be excluded from being used for service next year. The fleet will comprise small and medium planes to carry 140 passengers, in addition to wider models carrying up to 260 passengers.

The General Assembly of the company has earlier approved a plan to replace aging planes, where some were already sold and the rest are being sold. We also plan to sell some more plans during 2018//2019, which are of different Boeing and Airbus models.

Are there new mechanisms considered by the company to allow it to compete against other major companies and obtain its fair share of the market?

Product is what matters here. This means that the service offered to passengers on the plane is what determines the extent to which passengers prefer our company, hence, an increase in demand for our flights and an increased market share.

This is why we started thinking of putting forward a recovery plan for the company. It includes the aforementioned development of the fleet and calculation of costs. The optimal utilization of the first aspect ensures a better quality of the planes through getting rid of aging planes are replacing them with newer more modern ones.

What is your outlook for the expected growth in passenger numbers, revenues and net profits?

EgyptAir has managed to transport about eight million passengers last year with 81% regular rates. We aim for the same number this year.

Are there any outstanding local or foreign debts on the company?

Despite the difficult circumstances, EgyptAir managed to repay its debt to foreign companies, and over the upcoming period, it will be seeking to repay all its local debts, such as those to the petroleum sector; the largest outstanding debt by the company.

After the economic reforms carried out by the government, how was EgyptAir affected and how did it cope with the increased costs?

What Egypt and its neighboring countries went through over the upcoming period has caused losses that doubled year after year. Last year we tried to overcome the losses, and we were able to do that in the fiscal quarter of the budget of 2016/2017, where we achieved no profits and no losses, however, with the flotation of the Egyptian pound, we were back to square one because aviation can be seen as a weak child. Our industry is very fragile that requires great economic, political and security stability in order to succeed.

A small percentage of our expenses is in Egyptian pounds, while the majority is in dollars.

During the first half of this fiscal year, the company lost about EGP 4bn due to the delay in Umrah season and the difference in exchange rates after the flotation in November.

What are the new lines the company seeks to operate flights from?

With the start of the winter season, two new points will be launched in October, including Tokyo. By the end of the year Shanghai line will also be launched with wider planes. The company now covers 80% of its target points, however, some countries have currency crises or security crises which prevents us from putting them on our operation lines as this could cost the company significant losses.

Are there new price or service plans the company is seeking to offer over the upcoming period?

Within our plan to recover, there is the plan to optimally reuse our fleet in different flights which will reduce our costs and save losses each year. We will also recalculate our costs which will affect the company’s pricing policies.

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