As most airlines across the globe are responding to high oil prices by making personnel cutbacks, being especially selective with their routes and even grounding planes, there is no sign of crisis at Middle East Airlines (MEA), where the plans for continued expansion are still materializing.
As part of its continued efforts to encourage and support various sectors of Lebanon’s economy, in early August Lebanese Canadian Bank (LCB) signed a cooperation and finance agreement with MEA. LCB was the sole benefactor of the $65 million dollar deal, which is aimed to help the Lebanese national carrier increase and update its fleet with a new Airbus 330-200 aircraft.
The agreement, a clear indicator of the confidence that regional corporations have in their national carriers, was signed by both chairmen-general managers, George Zard Abou Jaoude of LCB, and Mohamad El Hout, of MEA.
“Middle East Airlines has proved that it is a very good company,” explained Elie Azar, LCB’s marketing manager. “They’ve made a lot of reorganization efforts, they’re re-engineering their administrative ways and they are doing excellent. Results are good, and we are expecting them to double this year, depending on the political and security issues in Lebanon.”
Aside from Lebanon’s infamously turbulent political atmosphere, LCB has minimal concerns about contributing such a sizeable 10-year loan, as MEA has offered not only its moral assurance, but also a significant collateral. “In this operation, the plane acts as collateral. It’s insured in London with Lloyd’s, plus it’s a mobile entity, so MEA can rent the plane to other companies if there are any big problems,” Azar outlined.
According to the International Air Transport Association, the airline sector in the Middle East expects to be bolstered by about $54 billion over the next decade, as the region plans to pour its resources into airport expansion. In addition to MEA’s most recent acquisition, over the last three years airlines across the region have ordered 700 new planes to the tune of $140 billion.
MEA appears to be on its own very impressive course of expansion, pursuing the growth of company capacity, productivity and supplies. Choosing LCB’s offer over those of other regional banks such as Bank Audi and BLOM Bank, MEA is following the path of greatest returns. “Middle East Airlines was very interested in our terms because we were able to offer the best loan at a very low interest rate,” Azar explained.
“This deal is very good for the Lebanese banking sector because it shows that Lebanese local banks now have the capacity to lend or to give such big amounts. Finally,” he concluded, “the deal is very good for Lebanese Canadian Bank; it’s one of our biggest operations yet, and we hope it’s only the beginning.”