The national carrier has changed management once again after 15 months. Amirah Ibrahim interviews the new chairman, Hussein Massoud, who insists that the carrier will change tactics not policies. Yet, he may be shaking the old carrier with his zeal for both profits and social responsibility How far does the change of the carrier's CEO reflect a revision of previously set policies? Policies and strategies are not subject to change, but management is. The national carrier's policies and strategies have been set a long time ago in regard to modernising the fleet, expanding the network, modifying the shape of the fleet and launching new services. Tactics and methods to apply policies and put them into effect can change. For instance, the carrier in the past tended to enhance its long haul services through ordering wide body aircraft to be able to reach far destinations. Thus it ordered new B777. Being a Star Alliance member since 2008, the airline now can reach hundreds of distant destinations through the alliance's network. At the same time, priorities have been revised to concentrate on Africa. Thus, we modified the order from two B777 to six B737-800. It is worth noting that EgyptAir develops its activities within integrated policies that rely on a triple partnership among a strong carrier -- EgyptAir, a hub -- Cairo International, and a strong airline grouping -- Star Alliance. We will never set new policies or strategies apart from these partners. What are the priorities of the new management applying the set policies and strategies? EgyptAir is highly concerned with community, where social responsibility guides its strategies. Human resources come on top of my management's priorities, especially the improvement of work and living conditions, incomes, health care, etc. Then profit making follows as a priority. Though being a state-owned company, we, EgyptAir, are a self-financing corporation that does not receive any subsidies from the government. In order not to burden the government but rather to contribute to the national income, we target more profits as much as we can. Yet this does not come at the expense of safety and quality bench marks that we are committed to maintain. Apart from the company and staff, passenger satisfaction is the core of EgyptAir's concerns. Thus, we focus at present on enhancing quality that satisfies clients, and reaching a balance point between offering better prices to passengers and making profits. In this concern -- passenger's satisfaction-- the airline is keen to continuously provide advanced systems, such as i-booking, e-ticketing, i-mobile, and e- commerce. We are even more obliged to be concerned about passenger satisfaction as a Star Alliance airline. In what way has the unstable situation of the air transport business affected your corporation? The air transport industry had been hit by many crises over the past two years. Bird flue and unstable fuel prices both had a limited impact on airlines, and then there is the credit crunch which negatively affected all the business. The figures released by the International Air Transport Association (IATA) indicated that the Middle East was the area with less impact. Almost 108 airlines all over the world shut down during 2008 and 2009. The spread of the AH1N1 virus hit our business in a tragic way particularly for the omrah season during the holy month of Ramadan which ended on 20 September. The airline had to refund tickets worth more than LE65 million to comply with new regulations set by the government. For the hajj or pilgrimage season due to take place in late November, there is a great concern that the government will cancel the season this year to stop the spread of swine flue. The decision will be taken in light of the incidence of flu during the school year. If the Hajj is canceled this year, it will be a painful blow to all. Obviously, EgyptAir relies on the hajj and omra as a key part of its business. Do you intend to maintain the same approach for the coming phase? This is absolutely right, but we moved a year ago to adopt profit-expanding strategies. We have contracted an American consultant, Seabury APG, Aviation Planning group, to optimise the network. It has completed two phases of the study identifying new alternatives that the airline can use regarding revising the network, and the shape of the fleet in accordance with operation requirements as a Star Alliance airline. The first phase will be applied during this winter season which begins in mid-October. The consultant will observe results to help formulate the second phase, which is due to be applied in summer season beginning in April. EgyptAir intends to expand in the African market where a number of big European airlines ended operations because of poor revenues. These airlines tended to adopt aggressive strategies in opening new routes. As the Big Guys with huge fleets and unlimited abilities, they launched many services to African destinations with high frequencies so as to control the market. But when air traffic slowed down all over the world, these routes turned out to be unprofitable for them. As for our expansion plans in Africa, they were the subject of an extensive study for a year and half during which we sought the help of market research companies. With their help, we took the move to reopen two routes we had closed five years ago -- Dar El-Salam in Tanzania and Abuja in Nigeria. At present, we are studying how to develop our network in eastern Africa. Then we will move to central and west Africa. I can assure you that EgyptAir will launch at least two new services to west Africa soon. It is worth saying that EgyptAir has a service to South Africa while the South African Airways, a sister Star Alliance airline, does not operate a service to Egypt. This is an additional advantage that boosts our expansion plans in Africa, conducted with the advice of Star Alliance. Does this mean that the national carrier may stop the high cost Far East services and instead use the alliance's network to reach those countries? The alliance's core principle is to integrate the business of all member airlines for the utmost benefit for each airline. It acts as one of the sources that provide airlines with data required in opening new markets from its consultancy bodies. It does not impose policies or tactics. To get straight to the point, EgyptAir's policy is to operate its fleet to strategic zones including the Far East, Africa and Europe. Thus routes like Tokyo, Bangkok, Moscow, Beijing, and areas like eastern Europe and Africa are not subject to suspension as long as they are profitable. It is a strategic option to keep the fleet flying to these points. In other words, when the airline withdraws from long haul destinations it does so for its own benefit. When it launches a new service to a nearby destination it does so for its own good. EgyptAir will never step out of any market; will never withdraw from a single destination as long as they are profitable. The national carrier has come to modernise its fleet recentlywith a number of purchase. Yet it has not ordered the newest lines of production -- A350 and B787 -- or the Dreamliner. Does your carrier face any financing difficulties? As for finance management, the carrier has gained such an excellent reputation in handling finance issues that the world's most famous funding bodies race to secure our needs to expand the fleet. The US ExIm bank would not have agreed to secure a loan by JP Morgan to finance the purchase of five aircraft B737-800 if it does not trust our abilities. A part of our strategies is not to get into a deal before defining our ability to pay the financial dues. In this concern, the financial management conducts many studies to determine the airline's capabilities over a certain period of time. Thus, we do not order the purchase of new aircraft if we have any financial obstacles. The airline has ordered eight B737-800 and 12 A330. These aircraft are the most modern of their families. We have upgraded the fleet with aircraft equipped with the highest technologies. The main reason why we do not order the A350 and B787 Dreamliner is that we have committed ourselves not to purchase an aircraft that is under research. Those airlines which ordered these aircrafts have paid the down payments and have to fulfill their financial commitments to pay back the loans. But so far, they did not get what they paid for because of technical delays in the production process. EgyptAir is not such a rich airline and our developing plans cannot bear such delays. On the other hand, EgyptAir has already pumped huge investments into upgrading and developing services such as ground services, maintenance and overhaul, in order to reduce expenditures. We should make the best utilisation of these facilities not minimise their use. EgyptAir is classified among the largest airlines in the number of employees. Will your management get rid of some of the nine affiliated companies which operate non-aviation activities? The size of labour power is expanding year after year because the airline hires better qualified employees to complement and replace existing ones who failed to improve their performance. EgyptAir has nine affiliated companies; each operates different activities. Three of them represent the core of the airline's business: the international airline, domestic airline and cargo. Three companies operate activities related to air transport: ground services, in-flight services, maintenance and technical works. The other three are medical services, tourism and integrated industries, which have considerable assets and employment. These subsidiaries represent a load on the airline which can make it without them. Yet, this is not EgyptAir's philosophy. We have a social responsibility, a commitment. To get rid of these companies, sell them partially or fully means to cut thousands of jobs and this is not what EgyptAir wants, not the current management nor other previous managements. However, the carrier is moving towards a joint venture with Rolls Royce and Lufthansa which some suspect is an act of "masked privatisation". That is a misleading. EgyptAir and Rolls Royce have signed a management contract where Rolls Royce operates the engine overhaul complex on behalf of EgyptAir. It is a matter of transferring experiences and learning the know how of the business. Rolls Royce does not control the work. It is a management contract. As for the affiliated in-flight services company, it has not expanded its facilities for years. The facilities that used to produce 5000 meals daily are now producing 30,000 meals daily. However, the sister company, after upgrading and modernising, is expected to serve airlines operating from Cairo International's TB2 and TB3, in addition to all the other six commercial airports in Luxor, Aswan, Alexandria, Assiut, Hurghada and Sharm El-Sheikh. The shares in the joint venture with Lufthansa LSG are divided 70 per cent for EgyptAir, 15 per cent for Egyptian Aviation Services company EAS and 15 per cent for Lufthansa's LSG. This means that the Egyptians have 85 per cent of the shares. The company was established to develop and upgrade catering services offered not only to our flights but also to Star Alliance flights operating from Cairo International TB3. The German LSG is contracted to manage the new facility. Possessing 15 per cent of the new company, LSG management will do its best to make the business as profitable as it can. However, EgyptAir maintains the right to nominate candidates from its existing staff, to be requalified. 120 will be retrained now and it is expected to expand this number to 1200 within five years. I assure you that the management has no intention to sell or to privatise its subsidiaries. What are EgyptAir's best prospects in the future? And what are the challenges it faces in the coming phase? There are many bright points. We have a professional staff, highly experienced and able to achieve tasks as required. With more work and investments focused on human resources, we seek to create a new generation of intermediate-level employees, ambitious and qualified ones to carry on with the carrier's management in the future. The airline possesses a modernised fleet with an average age of seven years. The fleet is expanding as well and is planned to reach 72 aircraft by 2012. Policies are stable. But most important is the healthy atmosphere facilitated by the Egyptian government. Airports, air navigation and air transport related bodies have been the subject of continuous upgrading and modernising over the past seven years. The Aviation Ministry has established a specialised Aviation Academy to provide airlines with the required professions. Only pilots and engineers have their own profession colleges. Airlines used to spend money to re-qualify university graduates to work as load masters, load planners, dispatchers, agents for ticketing and other air transport specialisations. At present, the Aviation Academy provides training in these professions and more. Challenges concentrate on the fierce competitions by airlines subsidised by their governments which target our main markets, both in Egypt and abroad. They have expanded their fleets with certain calculations and now they face a problem to load them with passengers. But the traffic is down. It is a difficult situation for all but we are confident about the future.
