CAIRO

- After a parliamentary session that witnessed many discussions about the feasibility of granting loans to government companies that only achieve financial losses, the Egyptian Parliament approved granting the holding company to EgyptAir a loan of 5 billion pounds from the Central Bank.

According to the draft law submitted by the government, which was approved by Parliament yesterday, Monday, the loan aims to finance the inevitable external and internal obligations of EgyptAir and its subsidiaries, with the guarantee of the Ministry of Finance.

And last year, EgyptAir obtained a loan of 5 billion pounds (about 318 million dollars) so that it could pay the salaries of employees on time, and pay the installments of the new planes that supported its fleet, which is close to 100 planes.

EgyptAir was established in May 1932, as a national state-owned company, and the seventh carrier airline in the world. It currently includes 9 subsidiaries and employs 35,000 employees.

Air traffic was suspended at all Egyptian airports on March 19 last year to prevent the spread of the epidemic (Al-Jazeera)

Parliamentary concerns

In front of the praise of a number of parliamentarians for the performance of EgyptAir - which they described as a great national entity - there were many concerns about providing the loan without a plan to develop the company according to a specific timetable.

Although there is no announced government figure on EgyptAir's debts, Parliamentarian Amira Abu Shaqqa said in her speech during the plenary session that there are reports that the company's debts have reached about 40 billion pounds, which represents more than half of the company's capital.

She added that the accumulated debts required the legal liquidation of EgyptAir, calling for announcing the real indebtedness of the company, asking: Is the loan discussed by Parliament a transfer of debt from EgyptAir to the Ministry of Finance?

Is it book debt?

The deputy of the Industry Committee in the House of Representatives, Muhammad Mustafa al-Sallab, called on officials of the Ministry of Civil Aviation to disclose the aspects of disbursing the loan, especially since the company had previously obtained a loan last year.

El-Sallab stressed the necessity of disbursing the value of the loan to develop EgyptAir according to scientific bases to be able to compete globally.

"We do not want it to happen, as it happened two years ago, after acquiring some planes that are not suitable for flying in hot cities, which affects ticket prices in an exaggerated manner," he added.

In November 2017, EgyptAir's holding company signed a contract with Bombardier for Canadian commercial aircraft;

According to this, the Egyptian company will receive 12 CS300 aircraft, at a value of $1.1 billion.

EgyptAir pays $12 million a month in installments for loans to purchase Canadian aircraft.

Representative Maha Abdel Nasser asked: Does the company pay the debts, or does it only lose and the government bears the payment?

In a telephone interview with a television program, Parliamentarian Ehab Ramzy said that EgyptAir spends one billion pounds per month on employee salaries and operating expenses, considering granting a loan to a losing company a waste of public money.

He added that the prices of Egyptian airline tickets are the most expensive on all airlines, despite the poor service provided, which was prepared by mismanagement.

Parliament approves granting EgyptAir a loan of 5 billion pounds (Al-Jazeera)

torrent of losses

Last January, the head of the holding company for EgyptAir at the time, Rushdi Zakaria, spoke of what he described as the bitterness of the losses incurred by the company, despite the partial return of air traffic in light of the emerging Corona virus pandemic.

He explained - in press statements - that EgyptAir's losses are not less than 700 million pounds (about 45 million dollars) per month, adding that the total losses since the beginning of the pandemic have reached nearly 10 billion pounds;

The equivalent of $635 million.

Air traffic was suspended at all Egyptian airports on March 19 last year - to prevent the spread of the Corona epidemic, and flight was resumed in July of the same year.

Despite the resumption of air traffic, EgyptAir continued to suffer losses, whether due to poor passenger traffic or the closure of vital flight movements for Egypt, such as Saudi Arabia and Kuwait, and the operation of exceptional flights only.

In his speech to Parliament, last Monday, Ahmed Aref, advisor to the Minister of Aviation, said that EgyptAir suffered losses due to the revolutions of January 25, 2011 and June 30, 2013, and then the Corona pandemic.

He added that there are many airlines in the world that have exited the market, the last of which was Italian Airlines, stressing the existence of an ambitious plan to compensate for past losses and a credibility to pay off debts.

Last March, the Holding Company for EgyptAir announced the completion of a specific vision on the restructuring plan in cooperation with the Central Agency for Organization and Administration.

The new vision adopts the integration of EgyptAir companies to become 3 instead of 9 companies;

In order to maximize returns, reduce expenses and interpersonal transactions, and develop the services provided.

EgyptAir confirmed that the merger process will not be matched by laying off any of the company's workers.