With over $600million lose due to the coronavirus impact on its operation, National airline EgyptAir is seeking a loan of $185m from state-owned banks to help it survive the crisis.
According to simpleflying.com, the carrier has been losing almost $200m a month since it was grounded in mid-March.
Egypt is planning to open to tourists from next month, but will people go?
A bailout to repay foreign loans
As with every other airline in the world, EgyptAir has been suffering due to the travel downturn. And just like so many other airlines, it is now seeking assistance for its state to survive the current crisis.
Reuters reports that Egypt’s flag carrier is looking for a three billion Egyptian pounds ($185m) bailout. This bailout would be in the form of a loan, which it hopes to source from the state-owned National Bank of Egypt and Banque Misr.
According to the Chairman of EgyptAir’s state holding company, Mohamed Rushdi Zakaria, part of these funds would be used to pay foreign loans that the airline had taken out to purchase new aircraft. The installments needing to be paid add up to $12m. The rest will be used to cover some of EgyptAir’s losses, which the airline pegs at around three billion Egyptian pounds ($185m) per month.
The airline was expecting the delivery of seven new planes last month but has so far managed to push these back to July. Flights will not resume until July, during which time EgyptAir expects to operate at just 20 – 30% of its capacity. It hopes to return to 50% of previously scheduled capacity by the end of the year.
Zakaria says that the process for securing the loan has already been started, and he hopes it will be concluded by next month.
Egypt is desperate for tourists.
As a nation that secures more than 10% of its GDP from tourism, Egypt is keen to get visitors back to its shores. Despite a dip in tourist revenue due to heightened security concerns in 2016, the country rebounded to secure $12.75 billion in the 2018/19 financial year.
In a bid to get visitors back to the country, the Egyptian government has been actively promoting the measures in place at the airports and on planes. Minister Mohamed Manar said in a press conference on Sunday that all planes will be sterilized, canned drinks and dry foods served only, and inflight magazines would be banned. At the airport, hygiene checks will be in place, while those coming from high infection countries will need to prove they are COVID negative before being allowed entry.
As well as getting on board with the health and hygiene requirements, Egypt has issued a number of incentives to encourage visitors and airlines back. Tourist visas for the key resorts have been waived until October 31st, while museums and historical places will have tickets discounted by 20%. Passengers arriving on EgyptAir and Air Cairo flights will receive further admission discounts.
For airlines, the government has put in place a 10 cent discount on every gallon of jet fuel and reduced landing and boarding fees by 50%. Ground services have also been discounted by 20% until the end of October.
With a clear vision to reopen the country and get tourists back into its resorts, Egypt needs a strong and healthy airline to help facilitate its economic recovery. But with EgyptAir reporting huge losses already, it might need more than just this one loan to claw its way back to health.