By Neil Denslow
Middle East Airlines is planning to list around 10% of its shares on the Beirut bourse as a first step towards full privatisation.
Middle East Airlines is planning to list around 10% of its shares on the Beirut bourse as a first step towards full privatisation. Lebanon’s Central Bank, which owns the carrier, will float the shares in the second half of next year after attempts to find a strategic investor were put on hold.
“We are not intending to have an issue or capitalise in the market,” Mohammad El-Hout, MEA’s chairman & director general, told Lebanon’s The Daily Star. “We intend to list in the market so there will be a tool to know exactly what the value of the company is in the market. When the company is listed on the market we will [be able to] make a more critical judgement of its performance,” he added.
The Central Bank bought 99% of MEA in 1996, when the airline was on the verge of bankruptcy. It has subsequently been turned around under El-Hout, who has slashed staff numbers and modernised the fleet. In 2002, MEA recorded its first profitable year in nearly three decades. Net profits rose to a record US $50 million last year, although this is expected to fall to $40 million this year because of the instability in Lebanon following the assassination of former prime minister, Rafik Hairi.
The plan to sell off the carrier fits into the government’s wider privatisation strategy. However, it has been sidelined for a number of years because of political squabbles about privatisation and the wider downturn in aviation, which has prevented the airline from finding a strategic investor. Now, however, the Central Bank is to move ahead with a partial float, in the hope of benefiting from the equities boom in the Gulf and the wider Middle East. The exact number of shares to be sold has not been finalised, but it is likely to be around 10%. A sale price has also not been agreed.
Once the shares are sold, the Central Bank will gain a more accurate estimate of the worth of the company, which will then be used to determine the price for the full privatisation. “A small portion of the shares will be traded on the bourse, because the second step is going to be to find a strategic partner, so that maybe together we can run the company as a way of privatising it,” said MEA’s financial advisor, Kamal Accad.
When this will happen, however, is still unclear. “It depends on the general situation, the offers we receive and the opportunities that we get,” said Accad.