The Central Bank-owned carrier entered last year on a high note. After struggling for years to overcome its endemic problems of overstaffing and inefficient operations, the carrier had been in profit since 2002. That was the year that new CEO Mohammad El-Hout’s reforms – a 40% cut in headcount and a strictly regional and medium-haul schedule, with only a few carefully chosen long-haul destinations – began to pay noticeable dividends.
After a pre-restructuring loss of USD44 million in 1999, it continuously improved, earning a record profit of USD50 million in 2004. It was positioned for greater success in 2005, as its Beirut base was enjoying a renaissance as the Middle East leisure destination of choice.
In 2005, another record profit looked likely and management was preparing for a 25% privatisation through a listing on the local bourse, when former Prime Minister Rafiq Hariri was assassinated. The event, predictably severely dented traffic inflows.
Beirut International Airport was out of commission for several weeks after the mid-Aug-06 bombing. The weeks-long conflict undermined traffic to Lebanon and the carrier was forced to relocate operations to Syria, Jordan and Cyprus for a period. The carrier underwent a capital expansion at the end of 2006, from USD185 million to USD365 million, most of which was acquired by transferring the advance funds that had been granted by the Lebanese Central Bank.
MEA managed to record a USD20 million profit in 2006, in spite of the political situation, which it estimates cost it USD45 million through lost revenue and direct cost increases. With the great majority of those profits generated during the eight-month period before the problems escalated, the future looks much less rosy. Traffic to Beirut continues to suffer, as heightened domestic strife between the nation’s three main ethnic groups has made for an uneasy environment.
