Tuesday, December 06, 2005

Lebanese Given the Chance to Succeed Usually Do!

When Lebanese are given the chance to succeed, they usually do. The Middle East Airlines (MEA) is an example of what can happen when politicians decide to allow business principles and market forces to rule the day rather than political shenanigans.




MEA has gone from losing tens of millions of dollars a year (and being called Missed Every Appointment), to upgrading its fleet and churning up profits of between forty and fifty million dollars a year.

Now if that is not a miracle, please tell me what is! According to an article by Reuters, which was brought to my attention by Tayyar.org, the next step is going to be floatation of 10 - 20 percent of MEA's stocks on the Beirut Stock Exchange. Bravo MEA! Bravo Mohammed Hout!

Yalla, when are we going to start reading about another such success story?

17 comments:

Ghassan said...

I agree with you although it is not a miracle! As you said when you apply "business principles and market forces". What I know is that the new CEO found out that the MEA is overstaffed and even there are employees stationed in countries that the MEA does not even go to! By the way, most of the "extra" employees were hired because of their connection to the Syrian mukhabarat or their Lebanese cronies. He offered them a retirement severence pay. The company is working more efficient because employees don't like to work when they see other employees drinking coffee all day and doing nothing!

I hope that this success will be transfered to the Water Department, Electricity Department, telephone and other government Departments. Privatization with control "supervision by government agencies to limit profit" is good for the country and also fair to the people who are paying their bills!

JoseyWales said...

MEA has a quasi monopoly on flights. How difficult can it be to make money?

Why do u think Paris-Bey is more expensive than Paris-NY?

Lebanon should open up that market, and see lower fares and more jobs in airlines and tourism.

JoseyWales said...

Ghassan, competition will take care of lower prices and limiting profits, not the government.

Vox Populi - Agent Provocateur said...

Yes but you have to know that they have a specil statue concerning airport slots and are favoured. Let's keep it that way for now, we don't need to have another state company losing money.

But on the (very long) long term, it's a bad thing, having expensive flights mean less tourists in Lebanon. You'll have to deregulate it.

Vox Populi - Agent Provocateur said...

And I can tell you from a (very) high ranking source in the MEA that the CEO and other important managers hire girls and give them important salary for being their mistress.

Raja said...

vox, that last comment was a little childish! Seriously! Do you think CEOs of Western corporations don't hire girls and cheat on their wives???

C'mon man! Their job is based on their performance as CEOs, not their moral qualities!

Raja said...

vox, josey, Beirut has an open-sky policy doesn't it? Is it just the Beirut-Paris route that is monopolized or are there others?

Lazarus said...

hehe, i think vox meant that they use company money to hire personal girls - which is different than hiring women for a job and then having an affair with them ... i wonder if it is that widespread in western companies given audits and accountability, but i actually have zero info on that.

Suha said...

Open skies, yes, but within limits. The mostly Saudi Menajet was planning to operate as a low-cost airline (à la Easyjet) starting last year but had to settle for charter because of government restrictions. Sooner or later, however, we will open up to the liberalization trend. In precisely 6 years, that is.

Raja said...

suha, the thing about some of these Khaleeji airlines is that they really don't care about the bottom line. Because of their ability to access petro-dollars, they can run below or at cost and outprice every single airline out there!

I'm not too sure such practices qualify as "fair competetition," and in fact, there are anti-dumping laws in industrialized nations that are used to prosecute such activities.

Raja said...

Laz, when western execs take things to such an extreme that their activites actually impact balance sheets (or if they are caught breaking laws) the media hones in, and all hell breaks loose.

the problem with our situation is that the line between the professional and personal realm is really blurred! So, when vox said what he did, I automatically assumed that he was commenting on the moral qualities of MEA's senior management (because that is what a lot of Lebanese do)!

It's just a bit frustrating... apologies Vox for lashing out like that.

Vox Populi - Agent Provocateur said...

Raja, the last comment wasn't intended as a joke. My source is a man who was on the MEA board.

Vox Populi - Agent Provocateur said...

And it's not about monopoly, it's about the time slots. MEA has the best time slots, good time slots are worth a fortune. Try to find a flight on Olympics during normal hours.

But I don't have a problem with this unfair competition. As I said, we can't afford subsidizing MEA.

Vox Populi - Agent Provocateur said...

I also accuse the Gulf airlines of unfair competition. They get subsidized fuel (especially emirates). This is why they are more competitive.

frencheagle said...

MEA is not being its debts nor its contribution to the social security, to the hospitals etc...

its current profit is largely overestimated if we re including all the fees and debts this company is not playing.

however like all institutions in lebanon, la raison du plus fort est souvent la meilleure

JoseyWales said...

Raja,

Not sure about MEA monopoly or protection and its routes. Guessing good deal of direct protection and indirect obstacles to new cos.

We just do not see the competition in that market.

Suha said...

Raja,
the point of the story was to indicate that there are government restrictions that help MEA. Otherwise, there would be a much wider margin for competition and "market forces".

That said, MEA people do an excellent job at organizing themselves both business wise and union wise. My husband flies in the cockpit sometimes and has remarked on how the employees (who also own shares in MEA, BTW) are extremely involved and interested in how the company is run. As you can see, there are many factors playing into MEA's success.