EgyptAir's Bain & Company turnaround plan taking flight

02 July 2019 Consultancy-me.com

EgyptAir’s turnaround plan devised by Bain & Company has taken off according to airline chief Ahmed Adel, with aims for a 100-strong fleet within eight years.

Egypt’s national carrier EgyptAir is on the up according to its state-appointed chief executive Ahmed Adel, with Adel telling Forbes that the airline held the goal of growing its fleet to  “north of 100 aircraft by 2027”, up from a current count of 71 planes. The turnaround plan was devised by global strategy and management firm Bain & Company, which was hired toward the end of last year following a period of turbulence for both the nation and airline.

According to Adel, the flight operations of EgyptAir Express and EgyptAir Cargo will also be folded into the main airline in what is described as strategy of quick wins, while the implementation of the entire turnaround plan is expected to take up to eighteen months. “My strategy when I first was appointed by the minister was to start organising the house, looking at areas where we can cut costs and we can be more efficient,” Adel told Forbes.

Adel also stated the airline had finally “levelled out” after being hit by a series of domestic and operational setbacks, including the 2016 crash of EgyptAir Flight 804 into the Mediterranean Sea and the loss of 66 lives and the earlier 224 mainly tourist deaths caused by the downing of Metrojet Flight 9268 over the Sinai Peninsula. Egypt’s tourism industry had already been greatly disrupted by the political unrest of 2011 and events which have followed.

EgyptAir's Bain & Company turnaround plan taking flight

This combination of factors had led to reported operational losses of over $800 million for EgyptAir in 2016 and debt levels in excess of $1 billion, and at the end of last year the airline tapped Bain to “provide consulting, technical and administrative solutions”, with the MBB firm winning the contract ahead of two competitors according to local media reports citing a source from the airline – coming out on top in terms of “technical and financial aspects”.   

At the time, it was stated that the restructuring strategy would be implemented in two phases, with the first – given an eighteen month timeline – concerning analysis and preparations for the restructuring of EgyptAir’s holding company and subsidiaries, followed by the implementation of the plan itself in a second phase. It also appears now that the turnaround has a distinct growth path, with the aim of an increased fleet and eyes on low-cost carrier Air Cairo.  

“We are looking into considering acquiring Air Cairo fully,” Adel revealed to Forbes. “We hold a 60% stake in Air Cairo, so we are doing our due diligence now because Air Cairo fits as a low-cost arm, and our strategy is to have a strong low-cost arm… If we take the decision to acquire it, we’re going to turn it around completely to be an LCC operator, fully scheduled, with all the bells and whistles and the perks that come with being an LCC.”

Thanks to the boom in such low-cost carriers, the global commercial aviation industry can be said to have been one of first prominent sectors to be hit by contemporary disruption, with industry-wide plummeting profitably the net result. As such, numerous airlines in recent years have been forced to call in the consultants – including Bain by South African Airways and Thai Airways. More recently, Jet Airways brought in not one but two firms; both McKinsey and BCG.