EgyptAir Gets EGP5Billion Loan to Evade Default

Egypt’s House of Representatives on Monday approved a loan for EgyptAir Holding Company of EGP 5 billion from the National Bank of Egypt and Banque Misr under guarantees from the Minister of Finance, Mohamed Maait.

Chairman of the House’s Budget Committee, Fakhri El-Fiqi, told lawmakers that the constitution stipulates that holding companies should be approved for loans 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 to obtain a loan of EGP 5 billion from the National Bank of Egypt and Banque Misr,” said El-Fiqi.

The House’s budget committee said the loan is necessary to assist the national carrier in mitigating the negative economic impact of the coronavirus outbreak.

“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.

He estimates that the losses amount to one billion Egyptian pounds per month, adding that despite the losses, the company is recovering and planning to increase its fleet from 67 to 107 planes, and the loan will be available on time to compensate some of the losses.

The law was rejected by MP Ihab Ramzi, who argued that EgyptAir’s losses and debts of about EGP 40 billion are mostly due to mismanagement rather than to the COVID-19 pandemic.

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