{"id":9762,"date":"2024-06-06T11:16:05","date_gmt":"2024-06-06T09:16:05","guid":{"rendered":"https:\/\/zawia3.com\/?p=9762"},"modified":"2024-06-21T11:26:29","modified_gmt":"2024-06-21T09:26:29","slug":"egyptair","status":"publish","type":"post","link":"https:\/\/zawia3.com\/en\/egyptair\/","title":{"rendered":"Why Did EgyptAir Sell for $300 Million What It Bought for $1 Billion?"},"content":{"rendered":"

Minister of Finance, Mohamed Maait, announced in the past hours the allocation of 20 billion Egyptian pounds from the state budget to finance EgyptAir (the national airline owned by the state, which turned into a holding company in 2002<\/a> that manages eight subsidiary companies) to buy new aircraft from Airbus.<\/p>\n

This decision came in response to a request from MP Nora Ali,<\/a> Chair of the Tourism and Aviation Committee, who called for a solution to the accumulated debts crisis that the company suffers from and the shortage of aircraft in its fleet. During the public session of the House of Representatives dedicated to discussing the new state budget, the MP described the aviation sector as going through a “crisis.”<\/p>\n

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EgyptAir was removed from the list of the world’s top 100 airlines on the Skytrax<\/a> World Airline Awards program, which ranks aviation quality globally. This sparked widespread parliamentary and public criticism. However, Minister of Civil Aviation, Mohamed Abbas Helmy, confirmed<\/a> that the ranking issued in June 2023 was an assessment for the year 2022, and efforts are being made to develop the company. The company’s losses until June 2022 amounted to about 30 billion pounds, while last month, the minister denied news about the company’s losses in the past year and announced positive profits \u2013 the size of which was not disclosed \u2013 for the last year.<\/p>\n<\/blockquote>\n

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A few months ago, Egypt had a full fleet of aircraft. In a highly controversial deal, EgyptAir Holding Company signed an agreement during the Dubai Airshow to sell 12 Airbus A220-300 aircraft, which had been purchased less than four years ago, to the American company Azura Air<\/a>.<\/p>\n

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The deal, which cost the Egyptian government approximately $1.092 billion, was sold for only about $300 million, according to MP Abdel Moneim Imam, resulting in a loss of nearly $800 million. The chairman of EgyptAir Holding Company, Yahia Zakaria, justified the sale of the aircraft after such a short period by saying: “These aircraft are not suitable for Egyptian climatic conditions,” and the company would use the sale proceeds to pay off the loan for purchasing the aircraft. However, MP Abdel Moneim Imam explained that Minister of Civil Aviation Abbas Helmy justified the sale during a meeting with parliament members by stating that there were no alternative solutions for the aircraft as they remained unused since their arrival between 2019 and 2020.<\/p>\n<\/blockquote>\n

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The document discusses an international investigation revealing Airbus’s involvement in arranging secret commissions to facilitate the sale of its aircraft in Egypt. The document indicates that Airbus gave direct orders to an intermediary to distribute 9.5 million euros in commissions to ensure the sale of aircraft to EgyptAir. The investigation, published by Mediapart and the German newspaper Der Spiegel, uncovered that these commissions were disguised under a “lobbying” contract to help complete a deal to sell aircraft to EgyptAir in 2003, worth 900 million euros.<\/figcaption><\/figure>\n

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Egypt began receiving the first batch of the 12 Airbus aircraft in September 2019. However, only four months ago, the French National Financial Prosecutor\u2019s Office (PNF) and the UK’s Serious Fraud Office (SFO) accused Airbus of manipulation, fraud, and bribery. Among the charges was the accusation that EgyptAir officials received $9.5 million in bribes through an Emirati intermediary named “Abbas Al-Youssef,” according to a document published by the German newspaper Der Spiegel. The indictment revealed that the Emirati intermediary, Abbas Al-Youssef, a retired pilot, paid these amounts to Egyptian officials to facilitate EgyptAir’s purchase of seven Airbus 320 aircraft. Abbas Al-Youssef, a former pilot in the UAE Air Force, leveraged his connections to work as an intermediary between EgyptAir officials and Airbus.<\/p>\n

In 2020, Airbus was convicted<\/a> of manipulation and violating the US International Traffic in Arms Regulations (ITAR)<\/a>, costing it over $3.9 billion in fines to settle these charges with government authorities in the United States, France, and the United Kingdom.<\/p>\n

What’s striking about this story is that Egypt purchased the mentioned aircraft deal through a loan<\/a>, raising doubts about the management of the entire deal, as the Egyptian authorities must repay the loan amount and its interest while selling the aircraft at a low price, with the company claiming it was forced to sell to repay the loan and buy new aircraft.<\/p>\n

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Manufacturing Defects<\/h3>\n

The aviation news site Simple Flying<\/a> revealed that after EgyptAir contracted in 2017 for the Airbus A220-300 aircraft deal, the Pratt & Whitney PW1500G engine on the Airbus aircraft experienced a “fuel leak” incident the following year, as oil leaked from the cooler during the plane’s ascent from Paris, causing oil pressure loss. The oil cooler is an essential component to ensure the engine operates efficiently and effectively.<\/p>\n

The Swiss Investigation Office (SUST) disclosed that the crew received warning messages about low oil levels in the engine due to a defect in the circular seal on the fuel oil cooler. Following this incident in 2018, the Swiss Investigation Office revealed two more damaged oil coolers and demanded the replacement of the cooler component in the Pratt<\/a> & Whitney PW1500G engine with a longer one with more powerful torque, but these demands were ignored.<\/p>\n

Senegal<\/a> and Tanzania filed lawsuits regarding engine defects, and Iraq<\/a> refused to receive its share of Airbus A321 aircraft for the same reasons.<\/p>\n

Airbus did not respond<\/a> to questions about the PW1500G engine problems, merely stating that \u201cits aircraft are equipped with the NAVBLUE<\/a> system,\u201d the new generation of digital air traffic management solutions.<\/p>\n

Similarly, the World Meteorological Organization supported this assertion on its official website<\/a>, stating that air traffic changes at intervals due to major changes such as storms, volcanoes, winds, and tropical cyclones.<\/p>\n

Diego Santana, a pilot with the Spanish airline, said that the aviation industry is subject to strict regulations from several international organizations such as the International Civil Aviation Organization (ICAO)<\/a> and the European<\/a> Union Aviation Safety Agency (EASA), which ensure that aircraft manufacturers comply with high safety standards.<\/p>\n

In statements to Zawia3, he added that these international organizations study weather conditions and changes that may affect safety, and provide transparent reports through auditors and inspectors who conduct regular inspections of all aspects of the aviation industry, including manufacturers, airlines, air traffic controllers, maintenance centers, and aviation academies.<\/p>\n

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Egypt has been a member of the ICAO since its establishment in 1953 and is also a member of the EASA. Egypt signed the Chicago Convention in 1944, which guarantees a set of rights and freedoms enjoyed by every state that signed the convention, including the regulation and issuance of aircraft airworthiness certificates, and aviation-related licenses such as pilot or controller licenses, and safety factors. Santana explained that these international agencies act as intermediaries between airlines and the manufacturer, and in the event of technical errors, these agencies take punitive measures that may include suspending the operation of a certain type of aircraft, meaning they have sufficient authority to take preventive measures.<\/p>\n<\/blockquote>\n

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Major Accidents<\/h3>\n

Reviewing Airbus aircraft incidents in Egypt between 2014 and 2024, there were about 36 major incidents. The most notable ones include:<\/p>\n