A new joint venture between EgyptAir and two private catering companies could make meals aboard the national carrier's flights, Amirah Ibrahim samples the deal As part of EgyptAir's efforts to boost its image regarding in-flight services, it signed a contract with two key players in the field of flight catering. Now, Lufthansa's LSG and Egyptian Aviation Services (EAS) will form a new catering company to serve EgyptAir, as well as other carriers which land in Cairo. According to Magdi Omar, chairman of EgyptAir's In-flight Services Company (EISC), the 25-year contract will come into effect in January. "A new entity will be created, replacing both LSG and EAS, that will manage their catering business in Egypt as part of the joint venture," explained Omar. The paid-in capital for the new company is $40 million, of which EgyptAir owns 70 per cent, giving it the upper hand in controlling the business. "The project's cost is estimated at $120 million, 40 per cent of which is self financed while 60 per cent is provided through loans," he added. Three years ago, Aviation Minister Ahmed Shafiq obtained the cabinet's approval to sell 40 per cent of EISC. The cabinet's approval also stipulated an increase in the company's capital by $6 million, or the equivalent of 40 per cent of the company's shares. The scheme failed since it did not attract any investors. Omar believes this was because the company's assets were highly overestimated and did not reflect the real economic position of the company. "Over-employment also represented an obstacle because investors wanted to reduce the number of the 1,800 employees," he added. After being unable to attract investors, a partnership with foreign experienced investors appeared a strategic option to make the catering sector more successful. "A partnership with foreign investors guarantees additional funding, an expanding international market and improved service quality," noted Omar. "This would encourage more regional and Arab airlines to buy our services." According to him, the international catering business is controlled by five key players, and LSG alone controls the biggest market share of 38 per cent. As for EgyptAir staff, about 40 per cent of them will join the new company after being re-trained. Omar is optimistic about the potential success of in-flight services after the new joint venture, hoping that improvement in marketing would enable the company to seize a considerable share of regional and international markets. EISC supplies 43,000 meals daily for 60 flights operated by 16 Egyptian and European airlines at Egyptian airports. "We control about 54 per cent of the Egyptian market, and we expect an increase with the completion of Cairo International's TB3 in June, 2008." Omar further expects to win more contracts to supply catering for 110 flights daily. The national carrier became a holding company five years ago, with its main sectors and activities divided between nine affiliated companies; each with separate management, but all controlled by the holding company.
