Egypt Will Loan EgyptAir $127 Million To Help With Coronavirus Impacts
Egypt Will Loan EgyptAir $127 Million To Help With Coronavirus Impacts
Egypt’s Finance Minister announced on Saturday its giving EgyptAir $127 million (2 billion Egyptian Pounds) in loans for the state-owned airline. The Finance Minister made the announcement and stressed support for the struggling civil aviation sector impacted by the coronavirus pandemic. President Abdel-Fattah al-Sisi of Egypt recently instructed the government to support the civil aviation industry.
Finance Minister Mohamed Maait said the Egyptian government will support the airline until it reaches 80% of its 2019 operation volume. The airline stopped operating scheduled international routes on March 19. At that time, Egypt closed its airports to combat coronavirus. Since then, EgyptAir has flown repatriation flights and some domestic operations. Maait said in a statement that the airline continues to spend money on expenses and salaries, while at the same time there is limited global air traffic.
Of course, Star Alliance member EgyptAir is a wholly-owned government airline. There is a significant incentive for the government to keep the airline afloat. The announcement comes just a month after IATA told African governments to spend more to support struggling airlines.
Tourism is a major part of Egypt’s economy, accounting for 12-15% of its gross domestic product. The Egyptian government said early in March that the country faced a $1 billion a month loss due to coronavirus. Egypt’s tourism sector has ebbed and flowed in the last decade, much of that due to political turmoil. When I was there in 2014, the pyramids and other sites were almost completely empty, due to the recent political turmoil. I can only imagine the impacts this will have on Egypt in the year ahead.
As of Sunday, Egypt had 11,719 coronavirus cases and 612 deaths.
Bottom Line
The Egyptian government committed to support their state-owned airline until they reach 80% capacity. This seems to suggest EgyptAir is going to be well protected by the government. Of course, it’s hard to know how long the airline will be impacted. But the tourism industry’s importance in Egypt will make it difficult for the government to turn away from the airline.
It will be interesting to see how long it will take to be back at 80% capacity. But I imagine that it has a long way to go before it gets there. That’s a very long-term commitment for Egypt to make and shows the importance it places on the airline.
