Lebanon Table of Contents
For years, Middle East Airlines (MEA) was the star of Lebanese international communications. It had bought out two other private airlines, Air Liban and Lebanese International Airlines, and developed a style and service second to none. By the early 1970s, despite the loss of ten of its airplanes during an Israeli commando raid on Beirut International Airport in December 1968, it had become a model for oil-rich Arab states seeking to establish their own national carriers.
MEA represented the best of Lebanon. It reflected close Franco-Lebanese relations Air France had a 30-percent stake in the venture, and Intra Investment Company held the principal 62.5- percent shareholding. Its chairman from 1952 to 1978, Shaykh Najib Alamuddin, scorned sectarianism and ran MEA as a socially and religiously integrated operation. This tradition of integration continued after 1978.
By 1975 MEA had become the country's largest employer, providing work for 5,600 people. Although the airline survived the Civil War, it was unable to regain the ebullience that had characterized its prewar operations. MEA survived the 1975-76 fighting by leasing many of its aircraft and flight crews to other Arab airlines and by operating on routes between the Persian Gulf and Western Europe that did not require refueling in Beirut. Nonetheless, losses were heavy, totaling US$12.8 million during the first 10 months of the Civil War. As fighting intensified in 1976, hope for full recovery diminished. During the quieter years of the late 1970s, however, the airline regained momentum. Old routes were reestablished, although in April 1977 MEA lost the right to fly to Damascus, as Syrian-Lebanese relations became strained. (The Damascus right was finally reinstated in August 1985.)
The airline was almost back to normal in the late 1970s and posted a US$2.4 million profit in 1980. But fresh fighting closed Beirut International Airport in the spring of 1981, and passenger traffic dropped. At the same time, an important long-term leasing agreement with Saudia, the national air carrier of Saudi Arabia, came to an end. MEA's revenues fell 32 percent, and fuel bills rose 21.6 percent; the net result was a massive US$19 million loss. Nonetheless, the airline's ambitions remained undimmed, and in October 1981 MEA signed an order to buy five Airbus A310 aircraft, with options on another fourteen.
Then came the 1982 Israeli invasion, and Beirut International Airport was closed for 115 days. Five MEA Boeing 707s were damaged so badly they had to be written off; six others were also damaged, but less severely. Company hangars and offices, occupied by the Israelis, were also hit. Passenger volume plunged from 936,618 million in 1981 to 634,919 million in 1982. Losses for the year reached US$49.2 million.
There was little improvement in 1983. The airport was closed for thirty-two days in August and September and for another seventeen days in December. Faced with the prospect of a record US$54.6 million loss, in November the airline terminated its agreement to buy the Airbuses. Airport closures persisted in Beirut, grounding the airline, and in August 1985 a Boeing 720 was destroyed and a 707 badly damaged by gunfire. The airline's all-Boeing fleet was depleted to just three 747s, five 707s, and nine 720s. In January 1987, another 707 was destroyed when the airport came under artillery fire. The aircraft was not insured because of the high war-risk premium, and MEA had to absorb the loss.
By October 1985, MEA became the only airline serving Beirut, and passenger traffic was down to only 1,200 to 1,300 daily--the lowest level since 1953. Despite falling passenger volumes and a 50-percent reduction in the airline's route network, MEA still held out hopes for recovery and negotiated in 1985 with Boeing, McDonnell-Douglas, and Airbus Industrie for new aircraft. High fuel costs meant that the airline needed a new generation of fuel-efficient aircraft, but the company lacked the funds to purchase them outright and could not borrow money to pay for them because lenders did not have confidence in the airline. Between 1965 and 1975, Lebanese entrepreneur Munir Abu Haydar had turned a small freight carrier called Trans Mediterranean Airways (TMA) into the largest all-cargo airline in the Middle East. But instability at Beirut International Airport forced TMA to shift operations to Sharjah in the United Arab Emirates in the 1970s and 1980s. TMA suffered a blow, however, in mid-1985 when Saudi Arabia forbade TMA and several other airlines to overfly the kingdom. Iraq, too, had banned TMA from entering its airspace, and the airline was effectively grounded. TMA formally suspended services in August 1985 and began selling off its fleet, which, at the start of the year, had consisted of eight Boeing 707s. The airline, however, was able to sell only one of its aircraft.
The airline asked the government for a US$10.6 million bail-out loan, but the government was slow to respond, and bankruptcy became a distinct possibility. Discussions on a merger with MEA began as TMA's financial position steadily deteriorated; its routes were cut, and competition from state-subsidized airlines mounted.
The MEA board responded cautiously to merger suggestions and waited to see if the government favored the idea. Then in mid-1986, Jet Holdings, a company with which Intra Investment Company chairman Tamraz was closely involved, effectively took control of TMA and assumed responsibility for its US$7.5 million debt.
Aviation politics in Lebanon were increasingly partisan in the 1980s. Maronite concern about access to Beirut International Airport had prompted efforts to develop an alternative airstrip at Halat, a military airfield twenty kilometers north of Beirut, to serve East Beirut and the Maronite heartland. The project was carried out under the supervision of Jet Holdings.
By early 1986, the Halat runway had been extended to 2,600 meters. Tamraz sought to involve MEA in the venture, which he believed might begin with charter service to Larnaca and Athens. But MEA refused to operate flights from Halat because the Ministry of Transport had delayed recognition of the airfield's civilian status.
After the government set up a committee to study a plan to turn military airfields, as well as Halat, into civilian airports, Beirut Inyernational Airport reopened in May 1987. But without the opening of Halat to civilian traffic, the outlook for MEA--an airline that had once set world standards for service--was grim.
Data as of December 1987
Lebanon Table of Contents