After three years of losses, the national carrier has reported the highest revenues ever in its history. Amirah Ibrahim reports Eight months late, EgyptAir released its annual report for the fiscal year 2003/2004, with results that were unexpected by most observers. The carrier has been in trouble for three years, since the government decided to turn it into a holding company, suffering a serious instability, with management and policies as well being changed every few months. This time, EgyptAir had good news for both its employees and the government which owns it. "We have netted profits of LE644.4 million and a total revenue that is the highest ever in our company's history," Atef Abdel- Hameed, company chairman, triumphantly announced during an address to the board members last week. The announcement came as a relief after the previous year's performance, when EgyptAir suffered losses of LE300 million and was left with an LE450 million deficit. The carrier's annual report was discussed at an official meeting headed by Aviation Minister Ahmed Shafiq. Total revenues reached LE947.1 million in the year ending 30 June 2004. In his review of the year, Abdel-Hameed said: "In a difficult year, our profitable result has been a superb achievement." He added that the company has fulfilled its commitments regarding all short-term loans and deposits. "These are respectable results in a difficult year where fuel costs increased by 45 per cent," he added. Abdel-Hameed reported that the fleet's operating margin increased by 8,768 hours, but he did not indicate its operating profits. Cargo volumes, measured in cargo tonne kilometres, were up 7.4 per cent reaching 72.6 million tonnes compared with 67.7 million tonnes for last year. Seats occupied increased by 10.6 per cent to reach a figure of 8.6 million passengers. Abdel-Hameed commented: "Our industry was already at the bottom of a cycle following September 2001. The SARS epidemic then followed and the war on Iraq caused us further losses." However, the chairman pointed out that with the help of international consultancy experts, the carrier managed to survive. "We only briefly and marginally reduced our schedules, redoubled our efforts in our markets, severely restrained costs, and kept to our plans," he said. A year ago, EgyptAir stopped 14 loss- making international routes between Cairo and various cities. The carrier came under fire when it ended three domestic services for the same reason. "We did not give up our responsibilities towards the country's national plans to develop commerce and tourism. Our focus remains on reducing controllable costs and debt whilst continuing to invest in our products. For example, we have started taking delivery of seven Airbus A330 aircraft and we continue improving our marketing programmes. Meanwhile, we continued our plans to develop affiliated companies and illustrate policies that meet the rapid development in the air transport industry." Some experts were suspicious about how the carrier could achieve such a remarkable turnabout so quickly. "No actual increase in present market volume or opening of new markets were reported, but the surplus was only achieved through cutting expenses. This is not bad, but it must be seen as correcting mistakes of the past, not as a great success," stated a senior source at the Ministry of Aviation. "EgyptAir should move quickly to compete in the regional and international markets with new strategies and programmes. It is a company that produces services and sells them, and it cannot survive only by cutting expenses," he asserted. But Abdel-Hameed argued that the carrier is actually expanding its fleet and domestic routes, after a structural reorganisation with the help of Sabre Aviation Solutions. "We are close to signing a purchase contract of four small jets to expand our fleet and reinforce our regional and local abilities," explained Abdel-Hameed. The airplanes, scheduled to begin operations in the summer, are to be purchased through AirCairo, which is 60 per cent owned by EgyptAir. According to the EgyptAir chairman, the current fleet does not allow for a flexible performance on both the regional and local markets, as it consists only of medium and wide aircraft. "The new 50-seat jets are suitable for domestic trips and can also perform successfully on short-range regional flights," he explained. Abdel-Hameed stated that the carrier has started new regular routes among Egypt's tourist cities, testing the waters with a moderate flight frequency. "We started with organising two flights a week between Hurghada, Sharm El-Sheikh and Alexandria so that to encourage people to replace the traditional railways transportation with flying. We are optimistic this policy will bear fruit, not immediately, of course, since we are competing with cheaper means of transport, but over the long run we are confident about winning over more passengers," Abdel-Hameed explained.
