 |
Al-Ahram Weekly 15 - 21 April 1999 Issue No. 425 
|
||
Published in Cairo by AL-AHRAM established in 1875 |
 |
 |
|
|
Al-Ahram Weekly 15 - 21 April 1999 Issue No. 425
|
||
| Published in Cairo by AL-AHRAM established in 1875 |
|
|
|
Egypt Region International Economy Opinion Culture Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters EgyptAir resists privatisation
by Gamal Essam El-DinMohamed Fahim Rayan, EgyptAir's long-serving boss, successfully managed last week to gather considerable parliamentary support for his policies aimed at keeping the company out of the privatisation programme.
Rayan, who was severely criticised by business-connected deputies in the Shura Council two weeks ago for his anti-privatisation policies, emphasised that EgyptAir does not exercise a monopoly of the air travel market in Egypt. "EgyptAir is not a monopoliser. It is a developer of the air travel market. It is a public company that is run as a private asset. However, if the private sector should be allowed into the air transport sector, it first has to tell us what kind of air travel market it wants to tap and operate in," Rayan said.
Addressing the People's Assembly Transport and Telecommunications Committee last week, Rayan asserted that EgyptAir is not against private competition in principle. "As a matter of fact, we are against other airlines which seek to ride on EgyptAir's wings. They want to pull the rug out from under our feet by taking the pilots of our planes and operating the same routes. My market is like a water pond which I developed over the years. It is quite unreasonable for alien people to come and seek to catch fish in my pond," said Rayan.
Although he met opposition in the consultative Shura Council, Rayan's anti-privatisation policies were supported by most of the parliamentary committee's members, especially the two leftist-oriented ones, Mohamed Marzouk and El-Badri Farghali. Marzouk argued that huge and strategic state-owned companies such as EgyptAir should by no means be slated for privatisation. "If such companies suffer from some technical and financial problems, this does not mean that privatisation is the ultimate solution. We have to prove to the privatisation advocates that an economic asset such as EgyptAir could be public and profitable at the same time," said Marzouk.
Joining forces with Marzouk, Farghali emphasised that EgyptAir should be the last state-run bastion to be slated for privatisation. "It is a giant public company which is the mirror of Egypt to the outside world. It is really competing well in the Arab and international markets and has managed to survive many crises, especially the attack on tourists in Luxor in November 1997," Farghali said. However, he emphasised that EgyptAir should be injected with a new management team. "There should be at least three generations of management leaders in EgyptAir in order to be well prepared for the volatile markets of the next century," remarked Farghali.
Responding to Farghali, Rayan indicated that a series of specialised centres have been established by EgyptAir to provide training for employees in management and financial systems. "This training is necessary to make sure that the next generations are qualified enough to maintain the company's leading position in the market," Rayan said.
Turning to the financial position of EgyptAir, Rayan said as much as LE1 billion was spent over the last 18 years to upgrade the company's infrastructure. "This self-financed amount was devoted to building technical workshops, training centres, catering areas, free zones, selling offices and recruiting new personnel." Besides, he added, EgyptAir borrowed as much as US$3.1 billion from a number of international banks to upgrade its fleet of planes. "Out of this amount, we have paid US$1.8 billion back. This must be added to a downpayment we made of US$672 million," Rayan explained. He showed the committee members a letter from the Bank of New York emphasising that in the past nine years EgyptAir has fulfilled all its obligations by repaying all loans on time. "This indicates EgyptAir's excellent management and its commitment to fulfil its obligations," Rayan boasted.
Rayan contended that the international airline market has recently witnessed a number of mergers and strategic alliances. "We know that this trend is the major globalisation threat posed to national air carriers in the next century. Now major world airlines are forming what are called 'star alliances'. We, as Arab airline companies, are by no means able to go down this path by making Arab alliances because we would be competing for the same routes. But EgyptAir is quite ready to make a strategic alliance with any of the international airlines. We suggested this to some of them, but as yet we have not received a reply," said Rayan.
At the same time, news sources reported this week that Continental Airlines of the US will buy the majority of shares in Lebanon's state airline Middle East Airlines (MEA) as part of the Lebanese privatisation programme. This marks the first time in the Arab world that a national airline becomes the partner of a foreign airline.
Elaborating on EgyptAir's market, Rayan indicated that it has been developed in the style of a stepped pyramid. "This means that we began by concentrating on and building up the most profitable base; namely the Arab and West European markets. As a whole, EgyptAir's flights serve as many as 72 destinations, compared to a mere 39 in 1980," Rayan said. He also explained that in the next period, EgyptAir will extend its flights to new destinations where many Egyptians live such as Toronto and Montreal in Canada, Houston in the United States, and Sydney and Melbourne in Australia.
"We also want to enter the golden gate of Eastern Europe, especially Serbia, Hungary, the Czech Republic and Slovakia, but political disturbances in Kosovo are preventing us from doing this," said Rayan. Rayan was sharply criticised by MP Ragab Hemeida, who described EgyptAir as a "corrupt company which is rife with financial irregularities". He asserted that EgyptAir bought 12 Airbus planes at LE700 million, but later had to sell them at a cheaper price. "They discovered that these planes were below the accepted standards of technical specifications," Hemeida said.
In response, Rayan emphasised that none of the planes bought by EgyptAir fell short of the standard specifications. He indicated that the last time EgyptAir bought Airbus planes was in 1997. "These were four planes to be used to support its non-stop flights to Japan and Los Angeles," Rayan said.
He added that EgyptAir has also recently signed a contract with one of the largest information technology companies in the United States to upgrade its operation control centres, improve operation of the fleet, and develop its air travel control system which will help minimise costs and maximise profits. These improvements should also make EgyptAir more competitive and make future alliances with international carriers possible. "The result of all these modernisation moves is that EgyptAir, albeit a public company, has managed to obtain a certificate of excellence in air safety from the US Federal Aviation Authority, and has been selected as one of nine international airline companies entrusted with forging the strategy of the airline industry in the next few years," Rayan asserted.
