BEIRUT: Middle East Airlines, Lebanon’s flag carrier, signed Thursday a Memorandum of Understanding for the purchase of 10 A320neo and A321neo aircraft, a statement by international aircraft maker Airbus said. MEA will announce its choice of engines at a later date, Airbus added.
While MEA chairman Mohammad al-Hout refused to disclose the value of the deal, sources close to him estimated the agreement at around $1 billion at current prices.
“MEA is focused on continuing to grow and improving its profitability at the same time as offering its passengers a very luxurious service,” Hout was quoted as saying.
“Adding the A320neo to our fleet means we can achieve all of these goals while benefitting from a 15 percent savings in fuel and cost effectiveness,” he added.
Airbus’ chief operating officer John Leahy said the deal showed MEA’s continued confidence in the aircraft maker. He added that the order for the highly fuel-efficient A320neo would put MEA ahead of competitors.
“We’re looking forward to seeing MEA’s A320neos operating seamlessly alongside their current generation A320 family and delivering them with savings through reduced maintenance and pilot training costs that come from the high degree of commonality between the models,” he said.
However, it is not clear how MEA wil finance the deal.
Hout has been able to successfully secure loans from Lebanese commercial banks to finance the purchase of other Airbus planes.
MEA operates one of the most modern fleets in the Middle East region with 17 aircraft including four A330-200s, four A321s and nine A320s, all Airbus aircraft.
The step followed MEA’s joining international airline alliance SkyTeam last month.
Membership in the alliance would allow the company to see a 10 percent growth in revenues and passengers, Hout said during a ceremony held on the occasion.
But in an interview with Arabian Business Wednesday, Riad Salameh, governor of Lebanon’s Central Bank – MEA’s major shareholder – said the flag carrier had canceled plans for a partial initial public offering.
Citing unfavorable market conditions, Salameh added that MEA would also no longer look at buying a stake in the struggling Cyprus Airways.
MEA’s profits declined to $40 million in 2011 from $90 million in 2010 as a result of increases in fuel costs, salaries and deteriorating political and economic conditions in the region, Hout told The Daily Star in an interview last May.
MEA reported $105 million in profits back in 2009, a record in the carrier’s history.
According to the Airbus statement, the A320neo family allows new engine options for the A320 family.
The A320neo aircraft, which will enter into service late in 2015, will incorporate large “Sharklet” wing-tip devices, delivering fuel savings of up to 15 percent.
The A320neo NOx emissions are 50 percent below CAEP/6, global emissions standards. The plane has a considerably smaller noise footprint, the statement highlighted.
Over 8,500 A320 family aircraft have been ordered and around 5,100 delivered to 365 operators worldwide.