Egypt's parliament approves EGP 5 billion loan for EgyptAir to evade default

Gamal Essam El-Din , Monday 18 Oct 2021

Egypt's House of Representatives – the lower house parliament – approved on Monday granting EgyptAir Holding Company a loan of EGP 5 billion from the National Bank of Egypt and Banque Misr under guarantees from the minister of finance.

EgyptAir
EgyptAir planes are seen on the tarmac, following an outbreak of the coronavirus disease (COVID-19), at Cairo International Airport in Cairo, Egypt, June 18, 2020. REUTERS

Fakhri El-Fiqi, chairman of the House's Budget Committee, told MPs that the constitution stipulates that loans granted to holding companies should come through a law passed by parliament.

"As a result, we are now discussing a two-article law that allows the minister of finance to issue guarantees necessary to open the door for the EgyptAir Holding Company obtain a loan of EGP 5 billion from the National Bank of Egypt and Banque Misr," said El-Fiqi.

A report prepared by the House's budget committee said the loan is necessary to help the national carrier mitigate the negative economic impact of the coronavirus pandemic on its performance.

"The pandemic dealt a severe blow to EgyptAir's operations over the last two years, and as a result, the company's cash inflows suffered a big drop, which has made it difficult for it to meet its financial obligations," said the report, adding that "foreign banks and international financial organisations could declare that EgyptAir is in a state of default."

Amgad Aref, a consultant to the Minister of Civil Aviation, told MPs that EgyptAir suffered huge losses due to the coronavirus pandemic.

"The losses are estimated at EGP 1 billion per month. But the company is currently recovering and it is planning to increase its fleet from 67 to 107 planes, and the loan will come on time to compensate some of the losses."

The law was rejected by MP Ihab Ramzi, who argued that "EgyptAir's losses and debts (EGP 40 billion) are mostly due to mismanagement rather than to the coronavirus pandemic."

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