April 11 (Bloomberg) -- Lebanon’s Middle East Airlines said the war in Syria has wiped out a revival in tourist flows that had built since the end of the country’s own conflicts, with first-quarter passenger numbers down 7 percent.
MEA posted net income of $63 million last year, beating the 2012 figure of $61.5 million after a $14 million one-time gain from plane sales, Chairman Mohamad El-Hout said in a phone interview. Demand may drop further if tensions don’t ease.
“We are surviving,” El Hout said. “We keep cash, control cost and believe in the future. We’re expecting to continue to make a profit this year but not as big as the years before. We are not expecting growth in passengers.”
Founded in 1945, MEA was once one of the Arab world’s top airlines, with Pan-Am, British Airways precursor BOAC and Air France all holdings stakes. Beirut sporadically closed to planes during the 1975-1990 civil war, with flights grounded again in 2006 amid Israeli strikes against Hezbollah. The Arab Spring hurt traffic to Lebanon from 2010 before the Syria conflict led to rising violence and an influx of more than 1 million refugees.
Tourism from the Gulf has been hit particularly hard after some countries imposed travel curbs, while plans for an initial public offering at MEA are in limbo because of the crisis, which would depress the value of any share issue, El Hout said.
“It’s not the right time in this political situation,” he said. “If you want to sell something you don’t want to get 75 cents, you want to get what it’s worth.”
Earnings should reach about $60 million this year given some stabilization, the chairman said, with the carrier seeking to boost long-haul traffic by adding a second daily flight to London’s Heathrow airport from April 17 after buying a night slot from Cyprus Airways for 6.3 million euros ($9 million).
MEA will open a route to Khartoum, Sudan, this summer, with two flights a week, El Hout said, and anticipates growth on services to Iraq, where it added Basra on March 30, having already operated to Baghdad, Erbil and Najaf.
Owned by the Central Bank of Lebanon, which rescued it from bankruptcy in 1996, MEA operates an all Airbus Group NV fleet of four A330 wide-bodies, two A321s and 11 A320s, it says on its website. The carrier has confirmed an order for 10 A320neos or A321neos for delivery in 2017, and may exercise an option for two more of the planes that year, the chairman said.
The carrier relies on code-shares in the SkyTeam alliance to provide long-haul links including 70 destinations in the Americas, and has no plans to add routes west of Europe and Africa, El Hout said. He also ruled out equity partnerships.
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