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MEA’s dysfunctional family

Lebanon’s national carrier grounds its fleet once again

by Zak Brophy

The dismissal last autumn of cancer-stricken Captain Joseph Ayat from the nation’s cedar embossed carrier, Middle East Airlines (MEA), reignited a history of discord that has been simmering at the company for more than a decade. This most recent incarnation of the dispute saw much of the fleet grounded for five days, with shards of acrimony among the workforce embroiling the upper echelons of the political establishment. What ostensibly started as a battle of principles between the pilots and their employer has rapidly escalated into a duel of much greater import regarding the integrity of management, the maturity of the union and where power really lies within MEA.   

The spark for the fire

Captain Ayat had served at MEA for 38 years, but with his license to fly temporarily suspended on October 21 due to his illness, MEA immediately terminated his position. According to the Lebanese Pilots Association (LPA), the manner in which this was done was in flagrant breach of the law, while the management counters that it was both in line with decades of precedent and, if not the letter, at least the spirit of the law.

Fadi Khalil, president of the LPA, says, “We want a sense of security for everyone. They have breached the labor law in this case.” The union argues that when the Director General of the Civil Aviation Authority (DGCAA) issues a temporary loss of license on medical grounds — as was the case for Captain Ayat — the pilot is entitled to a period within which he can carry out further tests and then have the case reviewed by the DGCAA. If this concludes with a final loss of license then the pilot is entitled, under Lebanese labor law, to two and a half months full pay and a further two and a half months half-pay before his employment is terminated.

Khalil claims, “In [Captain Ayat’s] case they didn’t give him time to do his medical checks to see if he could regain his license or not — as soon as they found out he had a medical problem they fired him.” What’s more, they contest that he was not granted the five months sick leave.

Captain Muhammad Aziz, who has been with MEA for 40 years and is advisor to the chairman, Muhammad Hout, argues that it was precedent that dictated when the management ended Captain Ayat’s service with MEA. “For the past 40 or 50 years, whenever a pilot was sick and his license was stopped, his service as a pilot was immediately terminated,” he says. And from a financial perspective he argues the company has paid what is due to Captain Ayat as dictated by the labor law, but that it was not delivered as a set severance agreement.    

See how deep the rabbit hole goes

Khalil argues it is actually this attitude of management that is the crux of the problem, with inflexible bosses the primary cause of labor actions that have struck the company over the past decade. He gripes that “management has had a practice for the past 10 or 11 years where they change things and they don’t tell you. Everything is by force.”

He stresses that the company cannot dictate, on what he considers to be a whim, how much and on what grounds severance payments will be made. “They said [the money] the company has paid is not because of the law but because they are nice… If this applies to Captain Ayat, what happens if another pilot falls ill? Do they want us to come and beg? No, we want them to apply the law.” 

Pressing their case, the LPA soon set about putting in motion the wheels for an industrial action — one that would quickly escalate out of their control. At a meeting of its general assembly on November 25 the LPA voted overwhelmingly in support of delaying by two hours all flights leaving Beirut Airport from 2pm that afternoon to 7pm November 27. When this did not push the management in the desired direction they escalated the action to a full 48-hour strike for all MEA flights leaving Beirut, starting at 10pm November 28.

With planes sitting idle on the runways, passengers seeking service elsewhere and losses racking up by the hour, the management’s ears were pricked. Within the first 24 hours of the strikes the two camps were back at the negotiating table and before the 48 hours were up the management had agreed to renege on their previous decisions regarding Ayat’s severance payments. However, according to the union, Hout insisted that this was pegged on three conditions: First, the pilots would have five days docked from every month’s salary until all losses incurred during the labor actions were recouped; secondly, they would have to promise not to threaten further strikes, and finally they would not present any further demands for benefits and concessions.

“[They] gave me three conditions to apply the labor law — I could not accept,” says Khalil. The union then embarked on an open-ended strike, pushing the altercation into intensified brinkmanship with both sides accusing each other of dirty dealings. In the end it took the intervention from the highest political echelons to bring a cease-fire to the labor war and the strike was ‘indefinitely postponed’ after five days, but not before the company was left with some $4 million in direct losses and the union frayed at the edges.

A soured past

While the emotive case of Captain Joseph Ayat’s dismissal was the kindling that ignited the latest firefight, the roots of the conflict stretch back more than a decade.

A grossly bloated company hemorrhaging losses, MEA was effectively nationalized in 1996 in a purchase by Lebanon’s central bank, Banque Du Liban (BDL), with the airlines’ losses peaking in excess of $86 million the following year. To this day the central bank owns 99.37 percent of MEA shares, though it remains registered as a private company and as such is governed by private company laws. 

Under the direction of BDL Governor Riad Salameh, a new management team was forged in 1998 with the current chairman, Muhammad Hout, at the helm. With the stability and authority that came with Salameh’s steadfast backing, Hout was tasked with devising and enforcing a fierce program of restructuring that won him few friends at the company. It is reported around 1,600 members of the inflated workforce were let go, and for the approximately 1,200 that remained contracts were redrawn and benefits slashed. LPA’s Khalil claims that, in total, around 42 privileges were affected including the pension, leave and loss of license schemes. And so it was that a new era at MEA was born, and with it the pilots’ strikes of 2004, 2008 and 2010 — all of which have led to negotiations in which the pilots have clawed back some of their lost benefits.

In this latest conflagration sparked by Ayad’s dismissal, the union has accused management of pressuring pilots by threatening to punish and even dismiss family members, though management ardently denies this charge. Conversely, the LPA has also been accused of forcing its members into line by threatening to remove union benefits, such as the medical cover offered by the LPA after their pilots’ insurance with MEA expires when they turn 60.

Khalil says that most of the pilots who broke ranks during the strike and flew for the company will be expelled from the union. He justified this saying, “The pilots who broke the strikes prolonged [them]. It gave the management the margin to negotiate for longer and it pushed it further to the point where people almost lost their jobs. There should be a penalty for this.”

He claims 23 of MEA’s 180 pilots took to the air during the strikes, which Aziz calculates kept the airline at around 43 percent capacity. Khalil says leeway is being granted to about half a dozen pilots, however, as the union permitted them to fly due to the pressure they accuse the company of putting on their families.

MEA is only too happy to extend a welcome to any pilots who leave or are expelled from the union, promising, in a circular seen by Executive, “The management of the company agrees to provide all the benefits to a pilot which may be lost in the case of his resignation from the syndicate or from any decision by the syndicate to arbitrarily expel him.”

Some pilots are now saying they don’t want to to fly with their colleagues who crossed the picket line. Furthermore, with the management courting pilots who have either left or will be pushed from the union, Khalil claims there is a battle underway for the loyalty of the pilots. “It is clear now who is with the syndicate and who went to the management,” he says. “It is 160 pilots who have stuck together, against around 20 who went.”

As a parliamentarian for the opposition Future Movement party who mediated with the unions back in 2001 and now serves as chairman of the Middle East Airport Services, Ghazi Youssef has a long-running and intimate relationship with Lebanon’s aviation industry. He eyes the industrial action initiated in late 2011 as a cynical maneuver by the LPA to extract more concessions: “The strike went on taking [Ayad’s case] as an excuse for further demands that they did not get in 2010. So they reopened the file that was meant to be done with. It was used as a pretense.”

Khalil denies this, saying: “In 2004, 2008 and 2010 there were strikes with pilots asking for better pay or rights but in this case the strike is just to support a colleague. It’s a humanitarian case. We don’t want any more money, just job security.” He then concedes, however, that “the trigger was Captain Ayat but it was an accumulation of actions from the management from 2001 to 2011.”

Demands on the table

The union is calling for an airport conditions of service manual, which lays out the rights, privileges, obligations and duties for the pilots. As things stand their employment criteria are scattered between a manual from before 2001 and a series of circulars and agreements since then. Khalil complains that the lack of a single reference means that management can act “on its whims”.

The management style of Hout and his “whims” has been a recurring bone of contention among staff and the unions, but it is something the chairman is unapologetic about. And to his credit, he has turned the company around. From net losses in 1997 of nearly $87 million, he had MEA back in the black by 2002 and by 2010 net profits had soared to $83 million. However, his obdurate and bullheaded style of management has drawn criticism from several quarters, where he is accused of not taking heed of his staff’s interests.

Aware of the censure leveled against him, Hout has been resolute in his role. During the recent strikes he refused to give any one-on-one interviews, but when caught in passing by Executive at the company’s headquarters he said, “We are all one family at MEA but everyone must know that I am the father of the family.”

Nabil Nicolas, a long-time MEA critic and a member of the Free Patriotic Movement (FPM) — party to the current coalition government — claims “the management style at MEA is dictatorial,” and whilst the LPA’s Khalil uses somewhat more diplomatic language, he says “they implement things by force, whether we like it or not.”

But, understanding the nature of management at MEA necessitates more than a personality assessment of Hout and his patriarchal disposition. He is ultimately responsible to, but enjoys the strong backing of, Salameh and the board of directors at the BDL.

“The problem is that Riad gave Muhammad Hout more power than he should have,” says Nicolas. “There is no general manager so Hout is both the chairman and the general manager. Is he supposed to make the decisions, implement the decisions and then hold himself to account?”

As for the board of directors flanking Hout at MEA, there are divergent claims about how informed and involved they are. “The board members rarely meet and don’t know anything. It is a one man show and everybody knows this,” quips Khalil.

Captain Aziz concedes that in the early days of restructuring this rang true, but he now sees the company as having moved from being in a “big war” into a period of “peace-times”. He argues, “[Hout] explicitly asks people to give their honest opinions and he doesn’t want people to just say yes, he thinks these kind of people are useless. Saying he is putting in place ‘yes men’ is one thing but saying he is putting in place people who believe in what he is doing is something else.”

Getting the fleet to fly again

With Hout still enjoying the unwavering support of the central bank, the security apparatus at the airport and significant political parliamentary blocks, he remained characteristically defiant as the labor action pushed on into December 2011. While the union appeared equally unprepared to beat a retreat it was, by Khalil’s admission, “looking for a way out”.

Despite the fact that the settlement for Captain Ayat had been resolved the two sides remained at loggerheads. With the management maintaining that it intended to penalize the strikers for the losses incurred during the strikes, the pilots refused to return to their cockpits. Both Minister of Labor Charbel Nahas and Minister of Public Works and Transport Ghazi Aridi then tried to bring the two sides to the table and broker a deal, with both attempts failing to bridge the impasse.

Further muddying the waters are accusations from the Future Movement’s Youssef that General Michel Aoun’s FPM party has been manipulating the LPA in a turf war with Hout. “There has been quite an underlying war going on between the Aounist movement and Mr Hout and MEA. It has been there for the past three years. Between now and then they [have tried to] take advantage of problems that occur in order to try and dislodge Mr Hout,” he says.

The LPA’s Khalil dismisses the accusations as “ludicrous”. Captain Aziz supports the LPA’s assertion that they are free from nefarious political motivations, but goes on to claim that they have been naïve for thinking a dispute of such considerable national importance could be kept isolated from Lebanon’s notoriously expedient politicians.

“Even if you start with a non-politicized action, it becomes politicized. I told the president of the syndicate before they started, ‘you have to go and see the politicians before you start’,” he says. However, as events unfolded it was the politicians that ultimately came to the union.

Entering the fifth day of the open-ended strike, the management threatened to fire 35 pilots if they refused to return to their posts. As pressure mounted on all sides to find a solution, Khalil was called for an urgent meeting at Aoun’s office. With the meeting ending and Khalil about to leave, Aoun took a message from one of his colleagues and then simply said, “It is over.” According to Khalil the FPM leader promised him, “You stop the strike and I guarantee you will not pay anything. Stop the strike and don’t worry about it.” Reassured by this pledge, the pilots announced they would resume flying as normal on midnight December 3.

So with the planes back in the air, the pilots still in employment and Ayat guaranteed his legally entitled severance package, it appeared the case was closed, but alas, few things are so simple in Lebanon.

With flying resumed as normal Captain Aziz distances the management from Aoun’s guarantee: “According to my knowledge, General Aoun said that he would speak to the company and ensure that the pilots would not be forced to pay for the damages incurred during the strike. But this is his promise. The company is still evaluating this to see [if it will meet it].”

But FPM parliamentarian Nabil Nicolas passes the ball back into the company’s court: “Michel Aoun took this decision based on a promise from Riad Salemeh… We will wait to see if Riad Salemeh honors his promise.”    

Still extracting punishment

As Executive went to print, half of the pilots had received deductions ranging from $300 to $1,500 from their most recent paychecks, according to Khalil. The pilots were not informed on what basis the calculations were made or if it would be a one-off occurrence. Furthermore, the union claims some pilots were still receiving letters threatening dismissal if they take part in further industrial action. While these actions are cause for consternation among the pilots, Khalil assures that this alone will not instigate a return to strikes or other industrial action.

With the fundamental tensions between the pilots and management still unresolved, Minister Aridi has invited the two sides back to the table. The pilots are still demanding a conditions of service manual, while the management remains stuck on “evaluating” the punishment to administer for last year’s strikes. Thus, whether Lebanon’s flag-bearing carrier can keep its fleet aloft is far from assured. As the Future Movement’s Youssef explains, “The embers are still burning and if you fan them the fire will start again.”

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Zak Brophy

Zak Brophy was Executive's Economics and Policy Editor from 2011 until 2013.
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