When MEA Joins SkyTeam. Benefits and Advantages
The national flag carrier Middle East Airlines (MEA) joined the global airline alliance SkyTeam, one of the three largest passenger alliances in the world.MEA expects the agreement to enlarge its passengers' base and generate revenue increases of at least 10%, as the deal would allow MEA flights to connect with around 14,800 flights and 983 destinations in 178 countriesI, as reported by Lebanon This Week, Byblos Bank newsletter.
It said that the agreement would allow Lebanese passengers to particularly benefit from better-priced long-haul flights to destinations such as Japan, the U.S. and China.
It noted that MEA customers would immediately be able to earn and redeem miles on any service operated by the alliance, while members of SkyTeam airlines' frequent flyer program can also earn and redeem miles when flying on MEA flights. MEA is the second Arab carrier to join the 17-airlines alliance after the Saudi Arabian Airlines. The deal would allow travelers to benefit from various supplementary services, including airport lounges, baggage handling and a pan-alliance frequent traveler plan.
The Central Bank owns a 99% stake in MEA, which has a fleet of 17 modern Airbus planes. MEA was planning to raise $250m through an initial public offering of 25% towards the end of 2010, but the partial IPO was indefinitely postponed. MEA underwent a restruc- turing program in 2001 that witnessed the layoff of more than 1,500 employees, or 40% of its staff, in addition to the cancellation of unnecessary flights and routes. Subsequently, the company managed to reverse 26 years of losses and returned to profitability in 2002. It accumulated consolidated profit of around $595m over the last decade.
However, MEA announced operating profits of $40m in 2011, constituting a drop of 56% from $90.6m in 2010. It attributed the profits' decline to a rise in fuel prices; an increase in the salaries of employees, pilots and crew; and the turmoil in the Arab region. It warned that a continuous increase in fuel prices would have an impact on the profitability of the company this year. It also expected the government-mandated salary increases to affect MEA's profits in 2012.
It noted that the company is facing increasing competition from many Arab airlines that are subsidized by their governments. It indicated that MEA's performance improved in the first four months of this year, as the number of passengers increased by 15% to 20% relative to the same period last year. MEA posted operating profits of $118.3m in 2009 and $101.1m in 2008. It is not possible to inde- pendently verify the actual financial state of MEA, as it does not publish its detailed balance sheet or income statement.
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