CAIRO: From upgrading its flight services to joining the renowned Star Alliance group to venturing into an IPO, the sky is indeed the limit for the national carrier EgyptAir.
Amid celebrating its Diamond Jubilee (75th Anniversary) on Monday, EgyptAir requested that its passengers buckle up in preparation for the launch of its new mid-range planes serving domestic as well as some regional routes, due to begin operating next month.
In announcing the formation of its ninth subsidiary last October, EgyptAir Holding Co. signed a deal with Brazilian aircraft manufacturer Embraer to buy six mid-range EMB-170 aircrafts to be used as the EgyptAir Express fleet, with an option to purchase six more by 2009. Delivery is set to begin this month with two aircraft, followed by another two in June and two more in July.
“Operations will begin in June with regular flights to Sharm El-Sheikh as well as Hurghada, said Mohamed Hassan, chairman of EgyptAir Express. “In July and August, we will expand our flights to other cities including Luxor and Aswan. We also plan to operate periodic flights during summertime to Borg El-Arab, Marsa Alam, and quite possibly the North Coast.
Besides its domestic routes, EgyptAir Express will fly to destinations that lie within a one-hour flying range such as Saudi Arabia, Lebanon, Jordan, Syria, Libya, Sudan, Cyprus, and Greece.
The deal, worth $170 million at list price, brings in the economical EMB-170 jets, with its 76 leather seats arranged in a single class and its higher fuel efficiency, which automatically implies lower operating expenses for EgyptAir and lower airfares for its passengers.
“There’s always been a need for a subsidiary within EgyptAir that focuses its operations on domestic flights more than any other routes, Hassan pointed out. EgyptAir Express, he added, would better serve passengers flying on domestic routes as it would offer them more convenient flying schedules. “The fleet will also absorb high demand on domestic routes that occurs during high seasons such as Christmas and New Year flights to the Red Sea as well as Umrah flights to Saudi Arabia during Ramadan.
With the purchase of the six mid-range jets, EgyptAir will have had a fleet of 50 aircrafts. By 2010, its fleet is projected to have reached 64 aircrafts. “Our fleet will also enable EgyptAir to re-direct its jumbo jets towards international operations, thus better serving all passengers, said Hassan.
Launching EgyptAir Express is also essential for the national carrier to partner with the worldwide Star Alliance group, a future objective of EgyptAir. “In order to join Star Alliance, carriers have to be predominant in their domestic markets. In EgyptAir’s case, that stipulation cannot be met without having a fleet fully dedicated to serving domestic routes, Hassan stated.
Joining Star Alliance will allow EgyptAir to become more competitive internationally, giving it access to all members’ airport lounges and integration with the worldwide frequent flyer program, among other benefits. Star Alliance’s current member airlines include Air Canada, Austrian Airlines, Spanair, United Airlines, Lufthansa, and Swiss International Airlines.
Stepping towards privatization of the national carrier, the minister of civil aviation recently announced that EgyptAir was looking into entering an IPO advisory agreement to sell 20 percent of the company to private investors to bring in between $900 million to $1 billion. Proceeds from the sale will, reportedly, be used to purchase around 12 new aircraft for the company.
“It’s a step towards privatization that will increase proceeds of state-owned companies, generating more revenue for the government and thus enhancing the overall performance of the country’s economy, explained Nemat-Allah Choucri, head of research at HC Brokerage.
