Egypt Air to Add 60 Planes in Overhaul of Fleet by 2022

Egypt Air aims to add about 60 more jets and will evaluate Boeing Co. (BA)’s 787 Dreamliner and 777, plus the Airbus SAS A350 and even the A380 double-decker as it seeks to rejuvenate an aging fleet and spur tourist traffic.

The Cairo-based carrier plans to operate 125 jets by 2022, up from 81 now, adding 17 aircraft to replace models more than 15 years old and 44 to meet its growth requirements, Egyptian Civil Aviation Minister Abdel Aziz Fadel said in an interview.

Egypt Air will most likely lease planes, which could also include current or re-engined variants of the Airbus A320 or Boeing 737-800 for short-haul routes, with the Embraer SA (EMBR3) E-195 and Bombardier Inc. (BBD/B) C-series models also in contention. Fadel said the carrier, which has lost 7 billion Egyptian pounds ($1.02 billion) since January 2011, must overhaul its fleet to add long-haul routes and exploit Cairo’s geographical position.

“Cairo sits between three continents, it has a special location,” the minister said in Dubai. “We’re developing Cairo as a hub and Egypt Air is developing better connectivity.”

The state-owned carrier’s plan envisages offloading older Airbus A320s and Boeing 737-500s, together with four-engine A340 wide-bodies and some 777s, Fadel said, adding that the models will be replaced with others in the 150 and 300 seat categories.

Hong Kong, Sao Paulo

“We are trying to sell the old planes, then we will be ready to acquire the new ones,” he said. Operating the A380, the world’s biggest passenger model, is a “possibility” beyond 2020. The airline will add routes to Hong Kong and Jakarta in Indonesia in 2014 and is considering Sao Paulo as a destination.

Egypt Air has been struggling for traffic since 2011’s Jan. 25 revolution forced former President Hosni Mubarak from power, with the instability exacerbated when successor Mohamed Mursi’s Muslim Brotherhood was ousted by the military in July amid deadly street clashes. Tourist arrivals fell 46 percent to about 564,000 in August from a year earlier as tensions heightened.

The Egyptian government has tasked Fadel with completion of projects halted after the initial 2011 upheaval. His ministry is overseeing construction at Cairo and Alexandria airports and at Hurghada on the Red Sea, costing a combined 6 billion Egyptian pounds and aimed at boosting total annual capacity from 30 million passengers to 45 million in 2030 and 55 million by 2050.

Funding for the projects is available through loans from the World Bank and Arab Development Bank, given in 2010, Fadel said. The financing of aircraft leasing should be “easy” because the monthly costs are cheaper than ownership, he said.

Egypt Air’s holding company may merge some businesses, which include maintenance and cargo arms as well as the airline, and the state could also provide an equity injection, Fadel said. The aviation industry hasn’t received any of the cash pledged by Gulf Cooperation Council countries after the ejection of Mursi and is “self-funding” via commercial loans, he added.

To contact the reporter on this story: Deena Kamel Yousef in Dubai at dhussein1@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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