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State grip on Tunisair slips

It's out with the old and in with the new for Tunisair. The airline's new president is gearing up to take the airline out of state control by renewing the fleet and shedding staff.

Since taking over as Tunisair's president and director general in March, Ahmed Smaoui has put the flesh on restructuring plans which aim to prepare the carrier for partial privatisation, including a US$500-800 million fleet replacement programme.

Smaoui intends to oversee a further divestment of the state's holding in Tunisair, which will cut the government's stake from 65 to 45 per cent. He believes the sale of a further 20 per cent of the carrier's shares will take place in the next two years 'probably to foreign investors, though not a foreign airline.'

Smaoui is hoping to establish a link with at least one major European carrier before the sell-off. He is looking at concluding codesharing and technical partnerships with one or two airlines by next year and is holding discussions with Air France, British Airways, Lufthansa and SAS.

The airline intends to acquire 19 new aircraft between 1997 and 2005. The carrier is set to order a mix of nine A320s and A319s for delivery between 1998 and 2000, according to chief pilot Abdelfattah Bayar. Tunisair will retain a mix of Airbus and Boeing by also taking eight B737-600/700s, he adds. Smaoui says in the medium terms the carrier is looking to order two long-range aircraft but adds that this won't happen until after 2000.

The new aircraft will replace Tunisair's ageing fleet of eight B727-200s, three B737-200s and eventually its four B737-500s, says Smaoui. Tunisair also operates one A300-200 and eight A320-200s.

The new aircraft will be used to increase frequencies on existing routes and for expansion. Tunisair intends to introduce services to Moscow, Kiev, Beirut, Kuwait, and Stockholm, says Bayar.

Smaoui is adamant that despite the considerable investment involved, the aircraft acquisition will not present any difficulties. Tunisair is funding the aircraft purchases internally, using the proceeds from the sale of its B727s and B737s as well as a line of credit supplied by a local bank. Smaoui says the airline's balance sheet is solid. Tunisair reported a jump in net profits of 76 per cent in dinar terms to Dn26.57 million in 1996. In dollar terms this constituted a 29 per cent rise to US$21.1 million in 1996, while turnover remained at US$520 million.

The carrier is also planning to cut its workforce of 7,000 by 1,000 employees over the next two years, and Smaoui says he will mainly target administrative staff. All staff, however, will be expected to contribute to the target of boosting productivity by 10 per cent over the next two years.

Smaoui expects the restructuring will cut labour costs from 23 per cent of total costs to 20 per cent over the next two years.

Lois Jones

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