Egypt's Nile Air urges government to take stakes in private airlines

Reuters , Sunday 26 Apr 2020

Egypt’s Nile Air on Sunday urged the government to buy stakes in private airline companies to help them survive the crisis caused by the new coronavirus pandemic.

The North African country grounded flights on March 19 until further notice among a raft of measures to slow the spread of the respiratory disease. Private airlines appealed to the government last month to intervene to halt their losses.

Private airlines don’t know how long they can bear fixed costs like salaries, aircraft rent, maintenance costs and aircraft parking fees, Yousry Abdel Wahab, Nile Air’s managing director, told Reuters.

“The state asks the companies to pay employees wages. I am not a charity, I am running a business,” he said.

The government or state banks have to invest in these private companies to retain employees, Abdel Wahab said, adding that “participation between the public and private sectors is what will bring quick results”.

Otherwise, companies will have no other choice but “layoffs and freezing all activity,” he added.

The government has not signalled its intention to buy stakes in private airlines, but on Sunday the ministries of petroleum and tourism announced a reduction in the cost of aviation fuel by 10 U.S. cents per gallon once flights resume as a measure to help Egypt’s shuttered tourism sector, according to state news agency MENA.

Abdel Wahab said he rejected an initiative from the central bank to offer affected companies loans with an 8% interest rate to cover salaries.

“No one will benefit from this loan except banks,” he said.

Nile Air, which employs 850 people and has seven leased Airbus planes, began turning profits in the past two years, said Abdel Wahab. The company was set up 11 years ago.

Egypt has about 14 private airlines operating at least 45 planes, said Abdel Wahab. Some of these support his call to sell stakes to the government, he added, without saying how many. 

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