MEA Chairman Mohammed Hout said over the weekend that the net profits of the national carrier may slightly drop in 2018 due to the rise in the prices of fuel oil, but assured that the results are still very satisfactory. “We achieved a net profit of approximately $90 million in 2017 after deducting all the operational expenses. But I expect our profits at the end of 2018 to be lower than the results of 2017 due to the surge of the oil prices in the international markets,” Hout told The Daily Star during a test flight of a new Brazilian-made aircraft to Turkey.
MEA has been posting impressive financial results since Hout took the helm of the company and restructured the airline which has incurred heavy losses due to mismanagement and unnecessary waste.
Hout closed many flight destinations that were seen as loss-making business, laid off thousands of staff after granting them handsome compensation packages and scrapped many of the old Boeing aircrafts that were at the service of the company for many years.
But the chairman said he still hopes that the results at the end of this year may pick up if Christmas and New Year’s Eve see a significant rise in the number of passengers.
He added that MEA achieved an accumulated net profit of $1.1 billion over the past 12 years.
About 99 percent of the airline is owned by the Central Bank, which controlled the company in an attempt to improve its performance.
Hout stressed that MEA has allocated $55 million of its profits to the Central Bank last year, and will continue to do so this year.
He said the airline plans to acquire more new Airbus planes in the next two years.
“We plan to acquire nine Airbus planes in 2020 and replace the older aircrafts in order to have one of the most modern aircraft fleets in the world. We currently have a fleet of 18 aircrafts, and two leased private jets,” Hout explained.
He added that MEA may open a new destination in Nigeria and might also consider resuming flights to Khartoum. Currently, MEA flies to 33 destinations in the Middle East, Europe and Africa.
MEA’s management is not in favor of opening new destinations in South and North America because there is no guarantee that they would generate sufficient revenue for the company.
“There was a decision by the U.S. administration in 1984 to permit MEA to fly to America.
“These are not sanctions, but a form of restrictions. For the time being, there is no decision yet by the U.S. authorities to allow Lebanese airlines to fly to the United States and no decision yet to permit American airlines to fly to Beirut,” Hout said.
He argued that flying to South America at the moment is not very profitable for the company.
“But we are able to secure indirect flights to South America through alliances with other international airlines,” Hout said.
He revealed the number of MEA passengers by the year-end is expected to reach 3 million an increase of 8 percent compared to 2017.
The chairman said that despite the tough competition with foreign airlines, MEA still controls 35 percent of the business at Rafik Hariri International Airport.
Responding to a question, Hout said the Central Bank has postponed plans to list 25 percent of MEA’s shares on the Beirut Stock Exchange until the conditions in the country improve. He emphasized that there is a misconception that MEA is a public company.
“MEA is a commercial airline, but most of its shares are owned by the Central Bank. It would be a big mistake if the airline was transferred to the public sector. Most public institutions in Lebanon are inefficient and losing money. We don’t want MEA to have the same fate,” Hout said.