Next week’s economic reports presented by Fawad Razaqzada, Market Analyst, Forex.com....
Behind the Hype of Saving an Airline
03/06/2013 7:00 am EST
Many businesses have compelling stories, but few are entwined with cultural revolution and civil war like this one. Not that you'd hear anything about it from the PR materials, writes Michael Karam of The National.
With more things to do on an aircraft these days, the in-flight magazine is probably not as widely read as it used to be. Still, it is an effective PR tool, conveying an airline's cuddly side to what is a captive audience.
The good ones, British Airways' High Life in particular, run slick features—often written by celebrities—on the destinations the airline serves, lush shopping spreads, and profiles of the great and the good who embody the company's brand values.
Lebanon's national carrier, Middle East Airlines, has a trilingual hodgepodge called Cedar Wings. It's not by any stretch a great read. I can't comment on the Arabic or the French, but the English is appalling and the features dire (although things have slightly improved since the early 1990s, when it once ran an article on hearing aids).
The most recent issue of Cedar Wings is no exception. The cover story, "MEA's journey in 15 years," is a 32-page hagiography dedicated to the achievements of the current chairman, Mohammad Hout, and how a former central-bank employee turned around a loss-making airline.
In true Lebanese fashion, no stops were left un-pulled and no superlative omitted. Hout is showered with plaudits by everyone from prime ministers and ministers past and present, a former MEA chairman, the head of the central bank, and various business leaders. Tom Enders, the chief executive of Airbus, even referred to Hout as "my brother." It's heady stuff.
When Hout was appointed in 1997, MEA was hemorrhaging $42 million a year. By 2002, it was in the black with a $3 million net profit, and by 2009 that had grown to $109 million. Things have admittedly dipped since those heady days, with 2011 profits falling to $63m, a state of affairs that has probably more to do with the regional turmoil and Lebanon's catastrophic government than anything else.
And yet if the truth were told, Hout is no guru chief executive. Those who know him say he is extremely bright and has a phenomenal memory for detail, but ultimately he is cut from ordinary managerial cloth.
The real, unadorned story is much more compelling. In the years after the Lebanese civil war, MEA—once the most advanced and feted airline in the region—had become bloated with sectarian appointees and burdened by an aging fleet.
Enter Rafiq Hariri, the late prime minister, who made it his life mission to modernize Lebanon as a destination for Arab tourists. MEA was a boil that needed to be lanced. A deal was struck between Hariri and political opponent Nabih Berri, whose supporters had found unproductive sinecures with the airline, that would allow MEA to shed this deadwood with minimal fuss.
The central bank, which partly owns MEA, stumped up the severance money and then put its man, Hout, into the top job. Aware that he knew zero about aviation, it prudently brought in a French aviation consultant.
The French connection didn't end there. Hariri's personal friendship with Jacques Chirac, France's president at the time, was instrumental in buying a new homogenous fleet from Airbus and restructuring profitable new routes across the Atlantic via Paris, in partnership with Air France.
Hout, with the backing of the central bank, stuck to his task manfully, even when angry employees besieged his offices soon after his appointment. When Hout was appointed I wasn't convinced, but given everything, he's actually done rather well.
Maybe MEA really does have something to shout about. But please find a decent editor for the magazine.
Michael Karam is a Beirut-based freelance writer. Read more from The National here...
Related Articles on GLOBAL
Recessionary numbers hit Eurozone as UK gets conditional Brexit extension, writes Fawad Razaqzada....
Lower bond yields and a weaker euro could boost European stocks, writes Fawad Razaqzada....
The Fed’s statement suggests weakness in the economy, along with concern over trade talks with...