Egyptair seeks up to $447m in state aid as it presses ahead with Africa growth plans
Egyptair, one of the Middle East’s oldest airlines, plans to ask for a government loan worth 5 billion to 7bn Egyptian pounds ($317 million to $447m) this year to help it weather the Covid-19 crisis.
The funds will be used to pay salaries, foreign loans and aircraft leasing fees, said chairman and chief executive Roshdy Zakaria yesterday on the sidelines of the Arab Aviation Summit in Ras Al Khaimah.
The loan will also bolster Egyptair’s cash reserves for the year after it spent 500m pounds a month during the pandemic.
“We are dealing with it and trying to keep surviving and this is with support of our government so that we can still continue our operations,” said Mr Zakaria.
“It is the worst catastrophe we have had in the last few years and I do not think we will have any other stronger catastrophe as this.”
Governments around the world have extended aid to their national airlines to help them survive the pandemic. Direct cash infusions and other measures such as tax relief and loan guarantees are valued at more than $225bn, according to the International Air Transport Association.
Egyptair received 5bn Egyptian pounds in direct government assistance and state-guaranteed loans last year. As a result, the airline did not cut salaries or jobs.
Mr Zakaria said he is optimistic about continued government support this year.
The airline is pressing ahead with plans to expand across Africa through partnerships with other operators and governments.
“To spread in Africa, this is our main goal,” he said.
The airline signed a joint venture agreement with Ghana to form a new airline, which will likely be called Air Ghana, that will start operations in the “next couple of months”, he said.
Egyptair, which will hold a 75 per cent stake in the venture, will provide four Boeing 737-800s to set up the fleet of the new airline.
The two parties are currently finalising financial and legal arrangements.
“There is a need for an airline in Ghana ... this will give Egyptair a hub in the middle of Africa so we can add more destinations which we don’t fly to,” he said.
Egyptair is also in talks with Sudan Airways over a potential joint venture. However, the airlines have yet to finalise the nature of the partnership.
It is also considering taking over flights to Israel – routes that are currently serviced by Air Sinai, he said.
The airline is optimistic about a rebound in passenger traffic this year. Passenger numbers currently stand at about 45 per cent to 50 per cent of 2019 levels. Egyptair plans to raise the figure to 75 per cent of pre-pandemic levels this year as more people are vaccinated around the world, said Mr Zakaria.
However, governments must ease restrictions, eliminate quarantine measures and collaborate on common standards for travel to resume safely, he said.
“The biggest worry is the continuation of the pandemic after the end of this year,” said Mr Zakaria.
Egyptair has no plans to shrink the size of its fleet and will take delivery of six Airbus A321neos and two Boeing 787 Dreamliners in March 2022.