GERALD BUTT / NICOSIA
The Lebanese Government has paid an estimated $140 million in special severance packages to 1,450 employees of Middle East Airlines (MEA) as part of measures to cut the costs of the debt-ridden state carrier. However, a Lebanese economist has said that cutting the size of the workforce, a move that faced strong opposition from unions and politicians, will do little to change the airline's fortunes.
MEA has faced mounting financial problems since the start of the civil war in Lebanon in the mid-1970s. Over the last five years alone it has lost $400 million. The government, ignoring protest strikes by staff, insisted the workforce had to be cut by a third to match the size of the airline - with a fleet reduced to nine leased aircraft and curtailed schedules. The government's aim is that MEA should eventually be privatised.
But economist Marwan Iskandar says axing 1,450 jobs fails to address the fundamental problems within MEA. "The government has done nothing more than buy itself a $140 million reprieve," he told the Beirut Daily Star. "This may have delayed the crisis, but it has not solved the problem which requires a total restructuring."
Transport minister Najib Makati has said that the government is hoping that MEA will attract a strategic investor before the end of this year. But Iskandar thinks this is unlikely, adding that MEA's "extravagant" redundancy pay-out has not helped its chances. "It was a political goodwill gesture by the government," he said, "but an expensive one. MEA's average load factor is 60%. That's too low to promise profitability."
Source: Flight International