BEIRUT — Lebanon plans to begin partially privatizing its national carrier this year, the company’s chairman said Thursday, as carrier pushes ahead with plans to rebuild its image as one of the region’s top airlines following years of civil war and the global financial crisis.
After a two-year delay caused by the world’s worst recession in over six decades, officials will begin the process for an initial public offering this year and Middle East Airlines’ shares will be listed on the Beirut stock exchange in 2011, MEA chairman Mohammed Hout said.
The carrier, which before 1975 was ranked among the Middle East’s best airlines, has been majority owned by the Central Bank of Lebanon after its rescue from bankruptcy 14 years ago. MEA fell on hard times between 1975 and 1990 because of Lebanon’s civil war.
Hout said in an interview he believed that the central bank’s governor “will take a decision to start (the IPO process) in 2010 and the process will be finished in 2011.”
Riad Salameh, the bank’s governor, had said in January that Lebanon plans to raise some $250 million from the 25 percent sale of MEA this year.
MEA, which was founded in 1945, has 13 planes in operation and serves 29 destinations. Two more planes will be received by the company next month, Hout said.
The company faces an uphill struggle to rebuild its image and fleet, which were hard hit by the civil war. The conflict devastated tourism in the country, forced repeated airport closures in the Mediterranean nation and left several MEA planes destroyed by shelling as Lebanon’s rival factions battled for control of the country.
MEA now faces stiff competition from other regional carriers based in countries flush with oil wealth, like Qatar, the United Arab Emirates and Saudi Arabia.
Economist Louis Hobeika said selling part of MEA will be a good step adding that the whole company should be sold eventually. He said such a step will lead to more competition, reduction of prices and absorb some of the high liquidity in the country.
“This is for the good of the company and for the good of Lebanon,” Hobeika said. “Private companies in Lebanon are better run than public companies.”
MEA’s privatization push is part of Lebanon’s broader effort to surface from under the rubble of a 15-year civil war and years of subsequent political instability that hammered the economy of a nation once dubbed the Switzerland of the Middle East for its lush mountain backdrop.
Lebanon’s strict banking laws helped shield the country’s financial institutions there from the worst of the global economic crisis that battered the West and other parts of the world. Even so, it has been hard pressed to sustain growth rates, in large part because it lacks the oil wealth enjoyed by many other Arab countries.
In 2002, MEA managed to reverse 26 years of losses to profitability and since then profits have been on the rise.
Hout said MEA’s net profits are projected to drop 40 percent this year, from $100 billion in fiscal 2009, largely due to what he claimed was unfair competition from other carriers benefiting from Lebanon’s open-air policy.
MEA recorded its best year in 2009 when the company made more than $100 million in net profit, thanks to a drop in world oil prices and growing security and political stability in Lebanon, Hout said.
Hout said the company strongly supports the open-air policy, but stressed there should be “no capacity dumping and no price dumping.”
MEA officials complain that some countries unfairly limit the number of flights by the Lebanese carrier to their airports, or provide them with late-night time slots that dissuade travelers.