Julian Moxon/BEIRUT
A visit to downtown Beirut to see at first hand the reconstruction that is now taking place is a powerful way of understanding something of the spirit that lies behind the rebuilding of the Lebanese national carrier, Middle East Airlines.
Twenty years of indiscriminate shelling left more than half of the city centre twisted and shattered out of all recognition. Much of the damage is still visible, yet the shocking evidence of the destruction that comes with civil war is disappearing fast as the replanned, restored and rebuilt city centre takes shape.
Before the civil war began, in 1975, Beirut's Mediterranean location, with ski slopes only a few hours away, made it one of the world's favourite capitals. Similarly, the national carrier, Middle East Airlines (MEA),had an undisputed reputation for top quality service coupled with high reliability and a good safety record.
As the fighting bit ever deeper, however, life changed dramatically for both city and airline.
MEA lost half (nobody seems sure of the precise figure) of its fleet of 23 aircraft and 40 of its staff were killed. Yet, long after other carriers had quit Beirut, the carrier was still working determinedly to provide Lebanese travellers, the vast majority of whom live overseas, with the only aerial alternative to a 6h boat ride to Cyprus.
MEA public relations general manager Khattar Hadati, who has been with the airline for 37 years, remembers that one of the strategies for survival was to base aircraft abroad. "Normal operations never ended," he says, even though Beirut Airport was closed for months at a time. "We relocated our operations to Cyprus and ran the airline from there".
MEA opened its first services in 1946, shortly after the Second World War ended, inaugurating many of the original Middle East routes. Some of those early services were to destinations with landing strips that were little more than sand runways lit by car headlamps and handheld torches. By 1973, however, the airline had welcomed its millionth passenger, and now transports almost 1 million a year.
MEA also claims to be one of the first airlines to have initiated a hub and spoke concept, organising schedules so that flights arrived in the morning from Gulf and Middle Eastern points to connect with European flights leaving Beirut around midday, returning the following day to connect with departures to points east of Beirut. This policy helped the carrier achieve clear profits for 15 consecutive years to 1976, and in 1977, 1979 and 1980.
WAR LOSSES
At the time, one-third of revenue came from transit passengers, but much of this was lost during the war. "We also were forced to stop our profitable outside maintenance activities, and of course, other airlines stopped coming to Beirut, which ended another valuable source of revenue," says Hadati.
The arrival of a new board of management in January has seen a major shake-up of the business strategy, starting with a move to an all-Airbus fleet. The new chairman, Mohamad El Hout, says that negotiations are under way with the consortium for the purchase of two new A310-300s to join the existing two 138-seat A320s, two 169-seat A321s and five 190-seat A310s (three -200s and two -300s). At present these are all leased aircraft, but El Hout makes no secret of plans to achieve a mix of leased and bought aircraft as soon as funds permit.
The consolidation of the fleet around short and medium range Airbuses, plus a move to drop all long haul routes, is part of a drive to move the carrier in to profit within three years. "We've been losing money now for several decades - it is the price we had to pay for the war," says El Hout. Operating losses for 1997 stood at around $70 million. "We cannot compete against airlines which have re-equipped with modern long haul aircraft such as the Boeing 747-400, Boeing 777 and Airbus A340," he adds. "Instead, we will rebuild, improve services and always keep the customer at heart, because without customers there is no airline." Schedules will be maintained throughout the year "-and we'll use the same aircraft on the routes so that passengers build up a sense of loyalty", El Hout says.
Previously in charge of the MEA dossier at the Lebanese Central Bank, which owns 99.7% of the carrier, El Hout leaves a strong impression that he means to see the changes through. There is no doubting, either, the commitment of those around him to achieving the targets. "We were all in this together," says one employee. "We lost friends during the war, but our loyalty to our airline was always there."
GOODBYE TO BOEINGS
According to El Hout, "-we have to make the best use of what we have got and provide the very best service possible within those resources". The strategy at present centres on changes to the route network "-because we cannot afford any more aircraft for the time being". By 1 June all of the Boeings still in operation will have been phased out, including the remaining six 707s that have been among the main workhorses of the airline for so many years (MEA operated Comet 4Cs and Caravelles in the 1960s, Convair CV880 Coronados in the 1970s and once placed an order, subsequently cancelled, for two Concordes). The three Boeing 747 Combis, delivered new to MEA in 1975, have also been sold to US freight carrier American International Airways.
The route network has been completely revised, with flights to Accra, Bahrain, Berlin, Brussels, Copenhagen and Kano dropped, along with services to Sydney, via Kuala Lumpur in Malaysia. Instead, the carrier will concentrate on developing services to regional points such as Abu Dhabi, Amman, Cairo, Dubai, Jeddah and Kuwait. In all, the number of destinations will be reduced from 33 to 20, while average frequencies will go up from 2.4 to 4.9 a week.
The aim is to return Beirut to its original status as a regional hub, a move which will be complemented by the opening in March of the first half of a new terminal at the airport. When the second half is opened at the end of 1999, capacity will be increased to 6 million passengers a year - treble the figure for the original terminal, which is being demolished as the new buildings take shape.
El Hout says that "-without alliances, we won't go anywhere. We're looking at all possibilities." Talks with its old ally, Air France, have begun, the French airline having held a stake of 28.5% in MEA back in 1969. This was reduced progressively to virtually nil as MEA's capital was increased with no corresponding input from the French carrier.
While the type of alliance has not been settled, El Hout points out that a link with Air France through its Paris Charles de Gaulle hub would connect MEA to many of the long haul destinations it will no longer be serving. "We will also look at complementary alliances to destinations not served by Air France," he adds.
Outsourcing is seen as another way to improve profits, and the recently signed deal with French maintenance company Sogerma is being promoted as an important way of re-entering MEA's once lucrative maintenance business. "We want to restore Beirut as a maintenance centre for the area," says El Hout, adding that the Sogerma deal was one project he was "-anxious to preserve" when he took over the airline.
"There are a lot of synergies, but we have to move fast if we are to capture a significant amount of the growing maintenance business for Airbuses in the area," he adds.
The memorandum of understanding between the two took just three months to come to fruition, and already a deal to maintain three A310-200s has been agreed. "We want a long-term partnership for the maintenance of our own aircraft as well as those of outside customers," says El Hout. The aim is to use MEA's facilities at Beirut for light maintenance, and Sogerma's Bordeaux base for heavy work. Joint Aviation Authorities JAR145 approval of the Beirut operation is being sought, and is expected by June.
A new board, with representatives from MEA and Sogerma, has been formed to run joint maintenance company MASCO. This was originally an MEA-owned company and, in 1974, it had 82 international carriers and government agencies on its books, along with approvals from 14 civil aviation authorities.
MAINTENANCE HOPES
Sogerma president Henri-Paul Puel says that MASCO is aiming for the first A320 "C" check maintenance contract to be tied up by September. "It is feasible, and we must do it," he says. The French company will be responsible for training MEA staff initially, but it hopes also to speed the JAR 145 approval process by pointing to MEA's reputation for maintenance and demonstrating that many of the original engineering skills are still intact.
Rising from the ashes of the civil war has not been easy, and the current recovery strategy is not the first. In 1986, the previous management also had a three-year business plan, which foresaw a return to profitability by 1999. It also placed the orders for the new Airbus A320/ A321s and called for staff reductions at outstations. Political interference, tough competition and internal difficulties meant that the scheme ran aground, however.
The hope is that El Hout will be able to draw on the enthusiasm of his staff to see his plans through to fruition. "In the old days we had a certain popular mystique," says one staff member. "Now, we must try and turn that into profits, but we must do it without losing the spirit that kept us going through the tough times."
Source: Flight International
