Lebanon's Middle East Airlines considers setting up low-cost arm amid 'new phase' of growth

The National

a day ago

Lebanon's Middle East Airlines (MEA) is studying setting up a low-cost carrier aimed at serving destinations in the Middle East and Europe, as the country plans to construct a second terminal in Beirut airport.
The budget airline would be a wholly-owned subsidiary of the wider MEA group but fully independent, Mohamad El Hout, MEA chairman, told The National.
'We are thinking of preparing within the next two years to launch a low-cost airline under MEA, starting with four aircraft,' he said. 'This depends on finding aircraft we can receive, the search is ongoing.
'A lot of airlines now have a low-cost carrier … several destinations require low-cost service, rather than the configuration we have in our fleet now.'
The airline has studied the market and sees demand for low-cost flights to destinations in Europe and the Middle East, he said, pointing to Germany, Denmark and Egypt as examples.
Lebanon's flag carrier was a standout in the airline industry when it became the only remaining commercial carrier to continue operating out of Beirut airport amid intensified Israeli attacks in the country last year.
Entering a 'new phase'
However, MEA's chairman said the airline is now turning a corner and embracing a new era of growth.
'We were in one phase, and now we're moving into a new phase,' he said, pointing to the UAE lifting a travel ban on Emirati citizens flying to Lebanon.
While Israeli attacks in Lebanon are still ongoing, they are 'targeted and precise' rather than wider military operations.
'They do not impact the significant growth in passenger traffic that we are seeing this month,' Mr El Hout said.
The airline is forecasting year-on-year growth of 10 per cent to 15 per cent in the second half of 2025, he added.
In terms of its fleet, MEA has an order book of nine aircraft. Six of these are scheduled to be delivered in 2026, two in 2027 and one in 2028.
MEA expects to receive four of the extra-long range Airbus A321 XLR aircraft next year.
'The narrowbody aircraft has the capability to fly for nine hours and this will allow us to open new markets, in Africa particularly,' he said. It will also receive two Airbus A330 Neo wide-body aircraft to replace older jets.
The airline is also seeking four A320 Neos but the market supply for jets is 'tight' and Airbus' backlog stretches to five years, he said, adding that the plane lessors have some availability.
Once these A320 Neo narrowbodies are secured, the airline can proceed with its plans for a low-cost arm, Mr El Hout said.
Like the rest of the airline industry, MEA is facing delayed aircraft deliveries amid industry-wide supply chain bottlenecks.
Airbus planes that it will receive next year should have been delivered in 2023, Mr El Hout said.
'There are frustrations but my duty is to find solutions,' he said.
New terminal at Beirut airport
Plans are also under way to construct a second terminal at Rafic Hariri International Airport, MEA's home hub.
The master plan, which is being developed by Dar Al Handasah in Beirut, calls for a second terminal with a capacity of five million passengers, he said.
The project may be developed through a public-private partnership (PPP).
'The Lebanese government is preparing a book of terms for the project and MEA is very interested in this new terminal, especially as it can be a dedicated terminal for the operations of the airline, its partners and SkyTeam [alliance member airlines],' he said.
'It will be equipped and operated in a very modern way, with state-of-the-art technology for processing passengers without the need for passports, which is what we see in other new airports.'
The master plan for the second terminal calls for eight piers or 'fingers' to accommodate narrow-body aircraft and three piers for wide-body aircraft, making a total of 11 piers, he said.
The master plan is completed and the next step will include issuing a request for proposals (RFP).
The second terminal will provide sufficient capacity to meet Lebanon's air travel requirements for several years ahead.
'We expect that phase one of this project will be enough for the next 10 to 15 years,' Mr El Hout said.
'If there is more stability, and more movements, there is a plan for phase two to accommodate 8 million passengers.'
The project is estimated to cost between $400 million and $500 million, the MEA chairman said.
'There is interest, not just from foreign investors, but Lebanese as well,' he said. 'It's a successful project. We've had discussions with several people and we already see the interest.'
Last month, Lebanese Prime Minister Nawaf Salam announced that the master plan for a second international airport in the country will be unveiled within a month, pledging to open the project to foreign investors.
'The master plan for the new airport, the Rene Mouawad Airport in Qlayaat, will be presented in the coming weeks – in less than a month,' he said in May.
Speaking on Tuesday at a conference in downtown Beirut, the prime minister said: 'We are advancing plans to rebrand and launch a second international airport. The second airport could play a strategic role in facilitating cargo movement and affordable travel.'
He was speaking at a conference organised by the Chartered Institute of Arbitrators (Ciarb) called 'Rebuilding Lebanon: Investment framework, business opportunities, and dispute resolution'.