By Wassim Chemaitelli

MEA's LOST ILLUSIONS AND RESTRUCTURATION : 1990-2002

In February 1990, MEA launched the Beirut-Tripoli/Kleyate domestic route (ME flights 001-006). The 30 mns flight was intended to improve communications with North Lebanon. Frequencies on this sector decreased as the conflict ended in East Beirut, and the service was discontinued in September 1992. MEA also re-introduced 2 of its Boeing 747s, still registered with American Express, and used them on its high yield routes. Services to Kuwait were suspended during the Iraqi invasion in August 1990, but MEA was the first foreign airline to return to Kuwait after the Iraqi army was defeated by a US led military alliance.

 MEA re-issued an in-flight magazine, "Cedarwings", during the summer of 1990, in a move that reflected the airline's plight for renewal. MEA carried around 727000 passengers in 1990. However, the airline had to face great operating costs related to its ageing fleet, and to the heavy investment it had to make in improving operating conditions in BEY, contributing to the 28.8 million USD 1990 losses. In 1991, MEA introduced services to Singapore, Accra and Berlin-Schonefeld and initiated plans for the fleet modernization.

50- MEA's Boeing 707 seen in Berlin-Schoenefeld in 1991. Copyright Frank Ebeling.

 In June 1992, a new board was appointed, and Abdulhamid Fakhoury succeeded to Salim Salaam as MEA's chairman. 2 Airbus A310s were leased from KLM- Royal Dutch Airlines, and a third Airbus A310 was leased-in from Polaris in a move towards the progressive withdrawal of the Boeing 707s. In 1993 MEA introduced services to Amsterdam, Sydney, and Colombo but had to face stiff competition from foreign airlines as they re-established their services to Lebanon. The US boycott of BEY meant MEA was still unable to resume flights to New York, and thus lost a lucrative market. Flights to Aden, Amsterdam, and Muscat were discontinued in 1994, and services to Damascus, Tunis, Khartoum, Bahrain and Doha were maintained at a symbolic once weekly frequency. MEA was stuck in chronic deficit and was severely under-capitalized. Its high operating costs kept it from catching-up with its competitiors, losing significant shares of its market.
 

54-MEA's network in 1995 (left). MEA launches services to Sao Paulo in October 1995 (right)

55-MEA's Boeing 707s could still be spotted in Larnaca's sky in 1996. Copyright Savvas Petoussis@Airliners.net.
Click on the image for more on MEA in 1996.

 In 1995, Khaled Salaam succeeded to Abdulhamid Fakhoury as MEA's charmain, and a recapitalization rescue plan was initiated with the support of Banque du Liban. As a result, the latter took control of 99.3% of MEA's shares. Moves were made in order to enter new markets, as MEA launched services to Sao Paulo, Brazil in October 1995, suspending in the same time flights to Madrid which were used by passengers from Latin America, and replaced services to Singapore with flights to Kuala Lumpur operated as a part of a code-share agreement with Malaysia airlines.In 1995 also MEA ended the phasing out of the last two Boeing 720s of the fleet and bought back from American Express the 3 Boeing 747s which were the object of a sale-lease back agreement signed in the mid eighties. Flights to Bucharest were resumed in 1996 as a move towards re-establishing routes to Eastern Europe. However, losses in 1996 reached 50 million USD.

56-MEA announces its new Airbus A320 and A321s and introduces its new livery (left). Click on the advertisement for more on MEA in 1997. Click on the timetable for more on MEA's 1998/99 timetable. An MEA ticket, ticket cover, boarding pass and timetable in their late nineties design (right).

 On January 31st 1997, MEA took delivery of its first Airbus A320, on lease from ILFC. It was to be joined later on by another A320, and 2 Airbus A321s, allowing MEA to phase-out the remaining Boeing 707/720 Cedarjets of its fleet by the end of the same year. MEA sold its Boeing 747s as to reduce costs inherent to the fleet modernization. MEA also leased 3 Airbus A310s from Singapore Leasings International. A stunning new livery was adopted, and MEA finally abandonned its yellow and orange corporate colours. However, the 1997 exercise ended with a record 87.4 Million USD deficit. These losses triggered corruption allegations against the airline's board, and the deal with Singapore, which cost MEA around 39 Million USD, came under heavy criticism. The deal was consequently re-examined and MEA obtained better terms.

 A new board was appointed in January 1998, headed by Mohamed Al Hout. The new board made radical moves in order to reduce costs. In the course of 1998, flights to Damascus, Khartoum, Bahrain, Doha, Colombo, Kuala Lumpur, Sydney, Kano, Accra, Sao Paulo, Brussels, Nice, Zurich, Berlin, Milan, Bucharest and Copenhagen were suspended. On the other hand frequencies were increased on high yield routes, as MEA flew daily and nonstop to Amman, Cairo, Jeddah, Kuwait, Abu Dhabi, Dubai, Paris and London. In June 1999, MEA moved its Paris quarters to Roissy Charles De Gaulle Airport's new terminal 2F, from where it flew twice daily to Beirut under a code-share agreement with Air France.

 MEA's network dropped to 19 destinations but on the overall operations were intensified, and schedules were optimized as to make the most of the airline's fleet, reduced to 9 aircraft ( 2 Airbus A321, 2 A320 and 5 A310). MEA's board had also to tackle explosive social issues, and faced increasing pressure from trade unions and pilot syndicates as mentions of MEA being over-staffed became dangerously recurrent. However, MEA's deficit fell by 50% in 1998. In the meantime, as an expression of MEA's will to regain markets when possible, the airline re-introduced services to Kano and resumed flights to Teheran (suspended for more than 20 years) in 1999.
 

The 1999 results were not substantially different from those of 1998, prompting the airline towards new initiatives in 2000 such as the Cedar Miles frequent flyer program, as well as the resumption of services to Accra, the revival of the code-share agreement with Malaysia Airlines on the Beirut-Kuala Lumpur-Sydney sector and the signature of a similar agreement with Sri Lankan Airlines for the Beirut-Colombo service.

The open-skies policy voted by the Lebanese parliament in November 2000 came as a challenge for the airline. Newer aircraft were leased in early 2001, an Airbus A320 and an Airbus A300-600, both from ILFC,  in order to replace the 2 Airbus A310-300, which lease contract had ended.

The year 2001 marked a turning point in the recent history of the airline. Pressed by the government, no longer ready to hold the financial burden MEA became, the airline's management came up with a restructuring plan. The latter included the reduction of  MEA's workforce from 4100 employees to around nearly 2700, by giving incentive for early retirement and shifting staff to subsidiary companies.  When none of these measures could apply, the airline would resort to lay-offs in exchange of important financial compensations. The move had initially drawn the expected outcry among airline staff.  Reassurance from the government and from the airline's board, with intensive negociations with the trade unions by the end of June 2001 defused the crisis and improved the terms initially given by MEA's administrators. The end of 2001 was marked by the September 11th events in the USA and the consecutive difficulties encountered by the aviation industry. MEA had to cancel its flights to Teheran. The code share flights to Colombo and Kuala Lumpur/Sydney also had to be cancelled as Malaysia alirlines and Sri Lankan Airlines suspended flights to Beirut. However, MEA globally improved its financial results in 2001 decreasing its deficit to 20 million USD. Flights to Milan were reintroduced in February 2002. A contract for the purchase of 6 Airbus A321s was negociated with Airbus Industrie in April 2002. 3 Airbus A330 will be leased in in 2003 from ILFC in order to replace the Airbus A310s leased from Singapore.

In 2002, and for the first time since 1981, MEA declared 3 million USD net profits. MEA was no longer a loss making company. With the new Airbus A321s on order, the airline's first owned planes since the last Boeing 707 bought in 1990, MEA looked all set for a new departure.

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