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Musallam raises the standard for the future

Posted 8 March 2018 · Add Comment

EgyptAir has just announced a major re-equipment programme to help meet its objectives. EgyptAir Holding Company chairman and CEO, Safwat Musallam, talks to Alan Dron about fleets, routes and future prospects.

Like all Egyptian airlines, the national flag-carrier has had to deal with the downturn in traffic that occurred after a series of security-related issues and the US and UK bans on personal electronic devices being carried in the cabins of aircraft departing from Cairo.
Those situations have now been resolved, or are on the way to being fixed, and the airline is looking forward to the future.
EgyptAir took centre-stage on two separate occasions at the Dubai Air Show in November. It filled outstanding requirements for new aircraft in three categories – wide-body, narrow-body and small narrow-body.
Its wide-body needs were met through an order for six Boeing 787-9s, which are being acquired on long-term operating leases from Ireland-based lessor AerCap and will be delivered in 2019. They will come from the lessor’s existing order book and will be powered by Rolls-Royce Trent 1000 engines.
The airline may look for a second batch of the Boeing twin-aisle aircraft, although this may come from another lessor.
Its narrow-body requirement was filled by another leasing deal with AerCap for 15 Airbus A320neos, which will use CFM International’s LEAP-1A powerplants and are scheduled to be delivered in 2020. These will also come from AerCap’s existing orders with the manufacturer.
Separately at the air show, it announced that the ‘small narrow-body’ category would be filled through a letter of intent with Canadian manufacturer Bombardier for 12 CS300 regional jets, with options for a further 12.
It is EgyptAir’s first order with the Canadian manufacturer: “We undertook a thorough evaluation process of our fleet and realised that the CS300 would fit perfectly into our business plans and growth strategy,” explained EgyptAir Holding Company chairman and CEO, Safwat Musallam.
“We selected the C Series aircraft because its excellent range will allow us to best serve domestic and regional destinations, including neighbouring Arab cities and the Middle East, as well as several European destinations. This is in addition to the CS300 aircraft’s exceptional economics and outstanding cabin. We look forward to expanding our network with the CS300 and we are happy to see that the partnership announced with Airbus will bring added support to the C Series programme.”
The CSeries aircraft will replace 12 Embraer 170 regional jets, which are approaching 10 years in service with EgyptAir. These operate both domestic services and regional services, as well as longer, thinner routes to places as far afield as central Europe on behalf of the mainline airline.
The Embraers will be sold, said Musallam at the Arab Air Carriers Organization (AACO) AGM in Sharjah in late November. “The best time to get rid of them is before they are due their C-Check,” the heavy maintenance session that aircraft normally undergo after 12 years. “This will be our strategy in future,” he added.
The new Boeing 787-9s, meanwhile, will replace the carrier’s existing fleet of six Airbus A330-200s, which are also around the 12-year-old mark.
The A320neo order initially seems a less obvious choice; although EgyptAir has around 10 A320-family aircraft in service (split between A320s and larger A321s), it is just completing deliveries of around 30 Boeing 737-800s. The new Airbus order will eventually give the company around 30 of each, said Musallam.
There are obvious cost penalties in terms of maintenance and spare parts inventories, but Musallam said that the two fleets would be sufficiently large to each have critical mass.
The company’s cargo division has also benefited from recent equipment renewal: EgyptAir operates three dedicated Airbus A300-600F freighters, but these will be replaced by the same number of the European OEM’s A330Fs, the first of which was delivered in June 2017.
In addition, it intends to operate single examples of both the A320 and the Boeing 737-800 in the cargo role: “These will allow us to cover all airports,” explained Musallam. “Some airports in Africa can’t accept the A330.”
When all the new aircraft have arrived, the enlarged fleet will be used to open up new routes, as well as to increase frequencies on existing ones.
EgyptAir is already expanding its route map; the increasing number of tourists from China is boosting the passenger numbers of several Egyptian airlines and the country’s flag-carrier is no exception. It already flies to Beijing and Guangzhou and was due to start services to Shanghai by the end of 2017.
However, the company is also looking west and south for its major expansion plans: “Africa is our target,” said the chairman and CEO. “We have very, very strong plans for Africa in the next five years.”
This will see EgyptAir increasingly competing, not only against the Gulf ‘Big 3’, which are rapidly increasing flights throughout Africa, but also against Turkish Airlines, which is on record as saying it wants to be the largest carrier on the continent. Turkish is a fellow Star Alliance partner, which opens up the possibility of cooperation between the two.
EgyptAir also has a codeshare agreement with one of the ‘Big 3’, Etihad Airways, and there are already plans to extend this beyond the Cairo-Abu Dhabi route.
Under stage two of the codeshare, Etihad will gain access to major cities across Africa on flights operated by EgyptAir via its Cairo hub. In turn, EgyptAir will be able to access routes to Australia and the Far East served by Etihad from its Abu Dhabi hub.
A third phase will see Etihad’s EY code placed on EgyptAir domestic flights across Egypt.
Cairo Airport is likely to play an increasingly important role in EgyptAir’s plans. The carrier has, for some time, looked at establishing the Heliopolis site as a major transit point that could compete with the Gulf hubs and the completion of Cairo’s Terminal 2 in mid-2017 gave it an expanded annual capacity of around 20 million passengers.
Musallam said that the airport was a “magical location to connect Europe with Africa” and even potentially to act as a hub between the US and Africa.
Bombardier predicts that African intra-regional traffic will grow by 4.6% annually over the next 20 years. It argues that the continent’s fleet of 60 to 150-seat aircraft will grow by 2.4 times to meet growing traffic demand; the manufacturer’s CSeries, of course, spans the upper half of that category.
Meanwhile, “The Egyptian market is getting better, day by day,” said Musallam. Tourists are starting to return – at the time of writing, an agreement to allow the resumption of Russian tourism to Egypt was thought to be imminent – and leisure traffic is a major component of EgyptAir’s business.
Apart from tourism, however, the national carrier can tap into two other major revenue streams: around 11 million Egyptians live outside the country, which provides a steady flow of passengers going back and forth between their jobs and their homes for vacation breaks. And religious tourism between Egypt and Saudi Arabia provides an unending stream of traffic as pilgrims head for Mecca to perform the Hajj and Umrah.
Not all route news for EgyptAir has been good recently. The decision by the governments of Egypt, Saudi Arabia, Bahrain and the UAE to break off relations with Qatar meant that the Cairo-Doha route has been suspended since June. Musallam was philosophical at the loss: “It was a golden route for us but, at the end of the day, we just have to deal with it.”
On the ground, EgyptAir also intends to expand the activities of its maintenance and engineering division: “Our technical company is already the largest in Africa and we have cooperation with Pratt & Whitney, Rolls-Royce and General Electric. More than 80 airlines in Europe, the Far East and Africa use us.”
 

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