Journal of Tourism & Sports Management (JTSM) (ISSN: 2642-021X) 2021

SciTech Central Inc., USA Vol. 3 (1)

240-252

EGYPT AIR STRATEGIC TURNAROUND

DECISIONS FOR RECOVERY AND
TRANSFORMATION
Alaa Ahmed Ashour1
Captain Airbus A340/330 Egypt Air, Ex. President Egyptian Civil Aviation
Authority, Egypt
Ghada Aly Hammoud
Tourism Marketing, Helwan University, Egypt
Dean Faculty of Tourism and Hotel Management, Bani Sweif University, Egypt

Hala Foad Tawfik

Faculty of Tourism and Hotel Management, Helwan University, Egypt

Received 20th July 2020; Revised 22nd July 2020; Accepted 22nd July 2020

ABSTRACT

Egypt Air suffered from great losses as a result of the 25th of January 2011 Arab spring in
Egypt. As a result of decline in travel demand to/from Egypt due to the political instability and
security concerns, Egypt Air promoted transit traffic through Cairo hub but suffered further losses
due to low yield of the connecting traffic.
Egypt Air initiated several strategic turnaround decisions to try to stop the performance
decline and build for the future. The initiatives were followed with a restructuring project to reduce
cost and increase efficiency.
A descriptive analysis of the strategic turnaround decisions and the restructuring program
is carried out supported with an in-depth interview with Egypt Air executives to understand the
nature of those decisions and the challenges facing Egypt Air in the future.
The Egyptian government should support Egypt Air transformation plan financially to be
able to meet its obligations during this transition phase. After restructuring Egypt Air should seek
a strategic partnership with a global carrier to be able to meet competition or arrange for a part
IPO to be able to fund its future development and expansion. Several other initiatives regarding
business process, employee training, talent recruitment, asset retrenchment should be addressed to
able to be profitable again.

Keywords: Political instability, Performance decline, Strategic decisions,

Turnaround strategy, Network optimization, Economic reform.

1
Correspondence to: Alaa Ahmed Ashour, Captain Airbus A340/330 Egypt Air, Ex. President
Egyptian Civil Aviation Authority, Egypt, Tel: 00201006599637, 00201211773530; E‐mail:
[email protected], [email protected]

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INTRODUCTION
Egypt Air suffered from a performance decline post the 25th of January
2011 Arab spring. The political instability, terrorism and the security concern
impacted the demand to travel to/from Egypt. Egypt Air business model as a
network carrier operating from Cairo airport was greatly impacted.
The decline in demand to travel to Egypt and especially Cairo impacted
both the local and connecting traffic. Egypt Air subsidiary companies providing
third party services were further impacted from the traffic decline at Cairo airport
since many international carriers stopped or reduced their operation significantly.
Egypt Air as a state-owned carrier helps to promote travel to/from Egypt
which in turn helps to develop the Egyptian economy. Its survival and existence
are important for the future development of the country; thus, it is a requisite to
identify characteristics of declining industries and nature of strategic turnaround
decisions, analyze different cases of airline recovery and transformation and
understand Arab Spring impact on the Egyptian economy and Egypt Air
performance.
Egypt Air initiatives for strategic turnaround had to be carefully analyzed
while addressing the future challenges and recommendations to stop performance
decline and achieve sustainable profitability. Furthermore, an in-depth interview
had been carried out with 10 Egypt Air executives, the interview revolved around
the recovery and transformation plans that included different turn around strategic
decisions to stop the performance decline and try to return to sustainable
profitability.

DECLINING INDUSTRIES PERFORMANCE

Porter (1980) indicates that the declining industries are those that have
experienced an absolute decline in unit sales over a sustained period of time.
Slower economic growth, product substitution resulting from cost inflation and
continued technological change would further impact the decline in performance.
Market conditions change, and when they do change then existing routines
and practices may no longer be optimal. This change is difficult, and it can
sometimes mean losing core competences (Dobrev et al., 2001).
Organizations are slow to adapt to changing market conditions. The
existing employee’s skills and motivations are committed to the current processes
and procedures, which may create political opposition to the coming change
(Dobrev & Barnett, 2001).
Under the political opposition of the employees, and the unwilling top
management team to pursue change due to fear about their own future,
management may try to delay the change until it is absolutely deemed necessary
hoping that the environmental conditions would change and the business would
catch up.

TURNAROUND STRATEGIC DECISIONS

Barker & Duhaime (1997) suggest that turnaround occurs when a firm
suffers from a survival threatening performance decline over a period of years, but

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is able to reverse the performance decline, end the threat to firm survival and
achieve sustained profitability.
Stacey (1993) observed that managers who think strategically are bound to
act more effectively in dealing with the future. To be strategic an action must
reinforce or change one or more of the following:
A- The scope of the corporation portfolio of businesses.
B-The market or horizontal scope of an individual business.
C-The value offered to customers of an individual business.
D-The competitive advantage sought by a business.
E-The operating strategy used by a business to deliver value to its customers.
Shoenberg, Collier & Bowman (2013) identified six most frequent turn
around strategies that were applied by firms that suffered from a performance
decline to achieve a sustained recovery. These turnaround strategies are:
1. Cost Efficiencies: Is a first step short term action to stabilize finances and
improve cash flow until more complex strategies are devised.
2. Asset Retrenchment: Following cost efficiencies, firms may appraise areas
within to determine possibility to raise efficiencies for better performance or
to divest the asset to generate cash flow.
3. Focus on Core Activities: Turn around strategies that include focus on core
activities has been successful. Firm activities are refocused around markets,
product lines and customer segments that will achieve the highest profits.
4. Build for the Future: After recovery and the stabilized financial position of
the firm the growth strategy for the future includes asset reconfiguration,
entering new geographic markets, extending the product line based on current
resources.
5. Reinvigoration of Firm Leadership: When a firm is considered in serious
difficulties, change in leadership is a signal to the media and shareholders that
the turnaround process has begun.
A new top management team with new skills to focus on the new strategies is
considered a precondition for almost all successful turnaround (Hofer, 1980).
6. Culture Change: Past beliefs that are taken for granted and assumptions that
declined the firm’s performance should be changed.

CASE STUDIES OF RECOVERY AND TRANSFORMATION

Lawton et al. (2011) identified two distinct strategic reorientation
approaches of legacy airlines to adapt to the changing environment, leading to a
new value proposition.
The first approach focuses on Improvement and innovation favored by
companies that have fallen behind adopted by Aeroflot, Air Canada and ANA.
This approach is based on reinforced corporate strategy and organizational
restructure to regain customer trust and loyalty. Network restructure, business
process reengineering, and cost control provided a new value proposition to
existing and potential customers.
Customers of Air Canada had the choice to pick from several sub-branded
fare structure under the new a la carte pricing offer (Hampton, 2006). The airlines
took advantage of the internet to make their products easily accessible through
their internet sites and E-ticketing.

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To achieve a leaner group structure the airlines pursued fleet optimization

and network realignment to increase traffic through their hubs while trimming
cost.
The second approach focuses on extension and expansion.
Underperforming airlines due to decline in their own historical markets such as
LAN and TAM preferred this strategy to extend their services and expand in other
geographical locations where opportunities exist.
LAN implemented a boundary Breaker strategy to setup airlines based on
its strong customer focused value proposition in new markets away from its home
country.
TAM airlines took advantage of the decline of Varig Airlines in Brazil
through a reorientation strategy of product extension and market expansion. TAM
adopted a more cost-efficient model to compete with the low fare carriers. TAM
attracted the business of the market by a strong brand identity (Pereira, 2006).
(O’connell & Connolly, 2016) uncovered the turnaround strategies pursed
by Aerlingus to transition into a value hybrid air carrier retaining both elements of
network airlines and low-cost carriers’ basic principles.
Aerlingus founded in 1936. A state-owned airline acting as the national
carrier of Ireland, suffered from inefficiency and bureaucracy that classified it with
the symptoms and characteristics of distressed state airline Syndrome (Doganis,
2001).
Capacity discipline, cost control, value added product differentiation,
innovative partnership, hub re-engineering at Dublin airport to target connecting
traffic flows between Europe and north America were all part of a visionary
turnaround strategy.
Transportes Aereos Portugueses (TAP) escaped from bankruptcy by
undertaking a major restructure and transformation strategy. TAP suffered from
government interference, poor interval communication, financial difficulties, and
industrial disputes embraced with strikes and low employee motivation.
TAP strategic turnaround decisions addressed the closure of non-profitable
routes, network and fleet optimization, wage freeze with a consensual labor
terminations and salary reduction, business process redesign to improve customer
service with a brand recognition campaign to improve customer perception. TAP
increased its efficiency and lowered its cost of operation while reinforcing its hub
and spoke strategy at Lisbon airport. A new pricing strategy was introduced 2008
to serve different passenger segments.
The top management team emphasized the importance of communication
between them and the employees, a culture change lead by informality, flexibility
and reduction of bureaucracy (Monsanto, 2014).

ARAB SPRING IMPACT ON THE EGYPTIAN ECONOMY

The Egyptian economy was negatively affected by the 25th of January 2011
Arab spring. The Egyptian economy real growth rate reached 1.8% in 2010/2011
and 2.2% in 2011/2012 post the revolution dropping from a soaring growth rates
of 7.2% in 2007/2008 and 4.7% in 2008/2009 as a result of the world economic

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recession fueled by the global financial crisis in 2008/2009 (Abdou & Zaazou,
2013).
The Egyptian foreign currency reserves dropped from US $ 36 billion pre-
revolution to a US $ 15 billion post-revolution. The fiscal year 2010/2011 in
Egypt witnessed deterioration of foreign investment after the revolution. Foreign
investment dropped from US $ 6.8 billion pre-revolution to just US $ 2 billion
post-revolution (Central Bank of Egypt, 2011).
As a result of the political upheaval, the unemployment rate reached
11.9% in the 1stquarter of 2011 post the revolution (CAPMAS, 2011).
The tourism industry revenues in Egypt dropped by nearly 60% with
arrivals dropping to nearly 45% in the 1st quarter of 2011 (World Bank, 2011).
(Mansfeld & Winklere, 2015) illustrated that the Arab spring impact on
tourism was unprecedented in the region, especially Egypt with its ramification
spreading for many years. Political instability and war in the Middle East
spreading from Libya to Syria and Yemen further aggravated the situation.
(Pizam & Mansfeld, 1996) elaborated that the tourism sector and in
consequence the travel business is affected directly and indirectly from violent
conflicts and/or political instability.
The mass media coverage negatively depicted the political instability in
Egypt. The media exaggerated facts which deterred travelers away. (Baral, et al.
2004) elaborates that terrorism and political instability are one of the main
coverage topics in contemporary media.
The fear of travel would be more pronounced by the travel warning issued by the
western countries. The travel warnings lead to a drop in air travel to and from
Egypt (Nasr, 2012). The central Agency for Public Mobilization and Statistics
illustrates in the statistical yearbook tourism section the total number of tourist
arrivals in Egypt starting from 2009 till 2018 (CAPMAS, 2019).
From Figure 1, it is concluded that the Egyptian tourism industry reached
its peak in 2010 with nearly 14,731,000 tourist arrivals. In 2011, as a result of the
25th of January 2011, Arab spring tourist arrivals dropped to 9,845,000 tourists.

Figure 1. Number of Tourist Arrivals in Egypt (2009-2018).

Source: The Central Agency for public mobilization and statistics, CAPMAS (2019)

The tourist arrivals after a short relief in 2012 dropped again to 9,464,000
tourists as a result of the 30th of June 2013 Egyptian revolution.

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Barely picking up in 2014 the tourism industry was further hit by the
tragedy of the Russian Metrojet plane crash terrorist act over Sinai on the 31st of
October 2015. The tourist arrivals dropped to 5,399,000 tourists in 2016 from
9,328,000 tourists in 2015.
At the end of 2016, the introduction of the Egyptian government economic
reform promoted tourism in Egypt, tourism flourished, and tourist arrivals grew to
reach 11,347,000 tourists in 2018.

ARAB SPRING IMPACT ON EGYPT AIR PERFORMANCE

Egypt Air was founded in May 1932. A state-owned airline acting as the
national carrier of Egypt, transformed in July 2002 into a holding company and
nine subsidiaries.
Egypt Air group consolidated revenue dropped to 12,890 billion EGP in the
FY 10/11 less 4.5% from 13,504 billion EGP in FY 09/10. The group consolidated
cost increased to 14,945 billion EGP more 15% than the cost of 12,971 billion
EGP in financial year (FY) 09/10. The net result for the group was a total loss of
2,059 billion EGP in the FY 10/11, which is a sharp drop from a profit of 533,122
million EGP in FY 9/10 (Egypt Air, 2011).
As a result of the political upheaval the chairman and CEO of Egypt Air
Holding Company announced that the Group is ready to lease up to 25% of Egypt
Air fleet (CAPA, 2011).
The situation during the events of the political upheaval was marked by
labor disruption and industrial demands from labor unions. Eminent strikes were
always around the corner, with continuous interference from unions into
management decisions. Egypt Air airlines alone lost 2,204 billion EGP in FY
10/11(Egypt Air, 2011).

From Figure 2, Egypt Air Airlines key performance indicators are

illustrated from FY 2009/2010 to FY 2017/2018. There were three major events in
the period from FY 2009/2010 to FY 2017/2018 that affected Egypt Air
performance.

Figure 2. Egypt Air Airlines Key Performance Indicators From

fy2009/2010 To Fy 2017/2018.
Source: EGYPT AIR AIRLINES ANNUAL REPORTS (2009/2010- 2017/2018)

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The 25th of January 2011 Arab spring had a major impact on load factor as
it dropped from 72% in FY 09/10 to 68% in FY 10/11 then to 65% in FY 11/12.
The 30th of June 2013 Egyptian revolution dropped the load factor to 63% in
FY13/14 from a load factor of 67% in FY12/13. The tragedy of the Russian
Metrojet crash over Sinai on 31 October 2015 due to a terrorist act had a slight
impact on the load factor as it dropped from 66% in FY 14/15 to 65.6% in FY
15/16 since it mainly affected tourist arrivals in both Sharm El Sheik and
Hurghada.
Following the 25th of January Arab spring Egypt Air airlines strategy aimed
to increase the connecting traffic at Cairo hub to compensate for loss of demand of
inbound tourism and business travel markets, the Available seat kilometers (ASK)
increased from 24,337 billion ASK in FY10/11 to 25,745 billion ASK in FY11/12
and 27,685 billion ASK in FY12/13 and 27,971 billion ASK in FY13/14.
Egypt Air Airlines implemented network adjustments expanding in Africa,
Europe and the Middle East with new destinations in Asia. Transit traffic at Cairo
hub increased from only about 3% before the political turmoil to reach 17% in FY
12/13 then to further increase to reach nearly 30 to 35% out of Egypt Air total
traffic in FY 13/14 (CAPA, 2014).
The increase in transit traffic pressured the yield down through heavy
discounting as the cumulative losses have reached almost USD 1.5 billion since
the political upheaval (CAPA, 2014).
After FY13/14 Egypt Air started to reduce capacity to match demand and
increase load factor. The ASK was reduced to reach 25,614 billion ASK in FY
16/17 which is a reduction of about 8.5% from the 27,971 billion ASK in FY
13/14. The result was an increase of load factor to reach 69.2% in FY 17/18 which
is about 6.2 points more than the 63% load factor in FY13/14.
From Figure 3, Egypt Air Airlines net results are illustrated for the period
from FY 09/10 to FY 17/18. As a result of the 25th of January 2011 Arab spring
and the political unrest that was accompanied with it, the demand to travel to
Egypt diminished especially Cairo airport which is Egypt Air Airlines dedicated
hub.

Figure 3. Egypt Air Airline Net Result from Fy 09/10 To Fy 17/18.

Source: Egypt Air Airlines Annual Reports from Fy 2009/2010 Tofy 2017/2018

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Egypt Air Airlines suffered from continues losses that started from
FY10/11 with a loss of 2,204 billion EGP to totally reach accumulated losses of 20
billion EGP in FY 17/18. The losses in FY 16/17 reached alone 5,553 billion EGP
as a result of low yield, low load factor and the foreign exchange currency rate
losses due to the introduction of the Egyptian government economic reform
measures by end of 2016.

RESULTS & DISCUSSION

Egypt Air strategic turnaround decisions

An in-depth interview was carried out with 10 executives of Egypt Air to
understand the environment that surrounded the strategic turnaround decisions and
the objectives that were meant to be achieved.
The new executive team at Egypt Air holding company announced at the
beginning of 2014 capacity cuts as part of a new strategic turnaround plan. The
slim network strategy announced by the CEO includes frequency cuts on some
European, Asian and Middle Eastern routes. Unprofitable routes such as Jakarta
and Kuala Lumpur that are heavily dependent on transit passengers with low yields
were suspended (CAPA, 2014).
As a result of the slim network strategy the capacity reduction was 8.5%
and the load factor increased 6.2 points by the FY 17/18. The excess fleet capacity
as a result of capacity reduction was leased out, two Boeing B777-200 were leased
to Biman Bangladesh Airline and five narrow body aircrafts were leased to other
Egyptian air carriers.
The introduction of the slim network strategy with a modest capacity
reduction of 8.5% did not stop the continuous losses of Egypt Air. A consultant
was appointed in December 2014 to develop a project for further strategic
decisions for turnaround.
The transformation plans covered work streams in commercial and
operations areas in order to achieve growth, improve products and services,
develop an effective organization and achieve Profitability to fund the future (El
Hefny, 2019).
The strategic turnaround decisions were as follows:
1- Network development by adding new markets and increasing frequencies,
achieving economics of scale, improving connectivity to build a strong
Cairo hub.
2- Expand Egypt Air global reach through star alliance.
3- Fleet optimization to achieve commonality, replacement of old aircrafts
with new technology aircrafts to reduce cost and increase efficiency to
achieve profitability.
4- Improve crew resource management with new organization structure,
policies and processes using new technology to increase efficiency and
lower cost with better work environment.
5- New dynamic and competitive pricing policy to attract more customers via
the Cairo hub and increase market share.
6- Apply best revenue management practices to maximize revenue.
7- Develop a performance driven sales organization.

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8- Reduce the cost of sales, develop Egypt Air call center and website
booking engine to increase direct sales through Egypt Air.
9- Improve Egypt Air brand perception; upgrade product and customer service
to increase customer satisfaction.
10- Introduce new ancillary products to meet competition from low cost
carriers.
11- Increase marketing activities especially digital marketing to attract new
customers and retain loyal ones.
12- Streamline the organization and manage intercompany service agreements
effectively while investing in information technology to accomplish the
strategic turnaround strategy.
There was a change of leadership by the end of 2015. The new Egypt Air holding
company CEO announced that Egypt air would be implementing a new major
restructuring plan. The plan core elements include network and fleet development
with a cost reduction plan (Egypt Air, 2016).
(Mousallam, 2019) explained that the major restructuring plan included cost
efficiencies as follows:
1- Renegotiating payable accounts term with the travel agents.
2- Renegotiating with aircraft lessors to reduce aircraft rents and extend
lease contracts.
3- Postponing employee pay increase until when financial performance
improves.
4- Increase both Egypt Air airlines and Egypt Air Express capital to relief the
debt payment endured from the deterioration of the financial performance.
5- Better aircraft route allocation, capacity reduction to match supply with
demand to reduce cost of operation as a result of the changes in demand
patterns after the political upheaval.
6- Network optimization to increase load factor by introducing tag flights to
certain destinations for cost reduction.
7- Upgrade the frequent flyer program to increase its efficiency for better
customer satisfaction and retention.
8- Reduction of outstations marketing expenses.
As a result of the two stage strategic turnaround initiatives that started from
2014, Egypt Air cash flow improved and losses reduced in FY 14/15 to reach
977,863,000 EGP from a loss of 2,923,660,000 EGP in the FY 13/14 which is a
reduction for about 66.5%in losses. A purchase/sale/lease back of nine Boeing
B737-800 was conducted as part of the fleet renewal plan to reduce cost of fuel
and maintenance and increase cash flow (Egypt Air, 2015).
A 5-year fleet plan to increase the fleet size to 84 aircrafts by 2021 ended
with an agreement to lease 6 Boeing B787-9 and 15 Airbus A320 NEO and the
purchase of 12 Airbus A220-300 with an additional option of 12 aircrafts (Egypt
Air, 2017).
By mid-2018 there was another leadership change with the appointment of
a new CEO at the head of Egypt Air holding company who announced the hire of
another consultant to assist with a new strategic turnaround plan and its
implementation phase. The aim of this new strategic turnaround plan was to
improve the performance of the group subsidiaries and their inter relations to
increase efficiency by relocating certain activities and processes within the group
(Rivers, 2019).

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Adel (2019) indicated that Egypt Air group restructure strategic turnaround
included the following:
1. Merge of Egypt Air Airlines with Egypt Air Express and the flight operations of
Egypt Air Cargo into one entity under the name of Egypt Air Airlines.
2. Increase Egypt Air holding company stake in Air Cairo from 60% to 100% in
order to change its business model from a charter carrier with part scheduled
operation to a low-cost carrier within the group.
3. Shift of the passenger handling activities from Egypt Air Airlines, the cargo
warehouse from Egypt Air Cargo, the cabin cleaning and aircraft push back
services from Egypt Air Maintenance to be functioned by Egypt Air Ground
Services to provide a more efficient full package ground handling services to in-
house subsidiaries and third-party clients.
4. Transform Egypt Air Holding Company into a slim organization to concentrate
on corporate strategy and planning rather than incorporating operational activities.
This would be done by transferring operational activities such as security,
construction and facilities management to Egypt Air Supplementary Industries
Company.
5. Transfer the Alliance department to the commercial sector of Egypt Air Airlines
for better coordination with the commercial department.
6. Study the transfer of Egypt Air Training Academy from under the jurisdiction of
the holding company to either Egypt Air Airlines or to merge with the Egyptian
Aviation academy. The aim is to provide full package training from the basic
training to the advanced training and to make the best use of synergies that may
arise from such a merge.
The new turnaround restructure plan improved the group performance, the
consolidated group result losses decreased to just 1,915 billion EGP for FY 17/18
from a heavy loss of 5,553 billion EGP in FY 16/17.

FUTURE CHALLENGES FACING EGYPT AIR

Egypt air faces the following challenges

1. Raising capital to fund future transformation and product upgrade. This

challenge would be more pronounced with the Egyptian government
comprehensive economic program that includes an initial public offering (IPO) for
state owned companies in all their forms and legal nature. The economic program
aimed to raise additional funds and lure more investments and to optimize the
state’s assets.
2. Effective integration of the merged business units and stream liming business
process under the new organization restructuring program.
3. Achieving high aircraft and crew productivity with the merger of Egypt Air
Express and Egypt Air Cargo within Egypt Air Airlines.
4. The presence of different aircraft types and configuration within the same
business unit would be a challenge to streamline operations processes and
procedures.

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5. Surplus employees as a result of the organization restructuring program. State

owned companies work force lay off program is based on a voluntary initiative
from the employees themselves.
6. Motivating the employees for the new turnaround plan and maintaining an
encouraging working environment to engage employees for better performance.
7. The start of operation of the new Capital International Airport near the new
administrative capital and the new Sphinx International Airport near the new
Grand Egyptian museum in Giza.
8. Competition from low cost carriers (LCC) operating from the new secondary
airports near Cairo airport.
9. Growth of Egyptian private air carries and the new start up ones under the
Egyptian government economic reform program that aim to restore economic
investors’ confidence and encourage private sector led growth.
10. The introduction of open skies policy into future agreements and the aero
political pressure to liberalize traffic rights into Cairo airport as a result of
government initiative to promote travel to Egypt to stimulate the economy.
11. Weak balance sheet due to the burden of the accumulated losses that reached
nearly 20 billion EGP. This burden will curtail the strategic turnaround plan and
future growth.

CONCLUSION
Egypt Air was subject to heavy losses due to the 25th of January 2011 Arab
spring political instability. As a result of reduced demand to travel to/from Egypt,
Egypt Air tried to increase its load factor by promoting connecting travel through
Cairo hub. The increase of frequency and new destinations supported with heavy
discounting failed to increase the load factor, the result was continuous heavy
losses.
Egypt Air initiated several strategic turnarounds plans for recovery and
transformation. The strategic turn around decisions addressed fleet development,
network optimization, pricing, revenue management, branding and organizational
restructuring that included the merger of several subsidiaries within the group to
reduce cost and improve productivity.

RECOMMENDATIONS
Recommendations regarding Egyptian government policy
1. Since the decline in financial performance was due to the political
upheaval, the Egyptian government should inject a onetime public subsidy
into Egypt Air to support fulfilling its financial obligations and the strategic
turnaround plan.

Recommendations regarding Egypt Air strategic decisions

1. After the completion of the strategic turnaround, Egypt Air should seek a
strategic partnership with a global carrier; this might include an equity
share. Or arrange for an IPO as part of the government economic reform
plan, to seek funding its future development and expansion.

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2. Egypt Air should streamline its business processes to capture the synergies
of merge of several subsidiaries and the transfer of several functions to
other ones within the group. This should be done with the introduction of
an information technology (IT) platform to integrate the business units of
the group. Such actions would reduce bureaucracy, improve
communication and increase efficiency.
3. Egypt Air should train the surplus employees as a result of the organization
restructure into new duties and responsibilities to accommodate them
within the new organization structure. This would support frontline
employees and the offered service standard while increasing productivity to
reduce cost and achieve profitability.
4. Egypt Air should maintain a continuous communication channel with the
employees to explain reasons behind the tough decisions and objectives of
the strategic turnaround strategy. This would improve the working
environment and build trust between management and staff while
motivating them for a better performance.
5. Egypt Air should initiate a fleet optimization plan to match future demand
with supply. Aircraft types and configuration should achieve the business
model objective. Fleet streamlining would reduce cost and improve crew
and aircraft productivity.
6. Egypt Air fleet transformation plan should phase out older aircrafts with
lower fuel efficiency with new aircrafts with higher fuel efficiency to
reduce cost of operation and increase profitability.
7. Egypt Air should redefine its business model after the merger of Egypt Air
Express and Egypt Air Cargo within Egypt Air Airlines. The new business
model would clearly define the target markets and customer segments, the
product and service offered.
8. Egypt Air should coordinate with its charter subsidiary Air Cairo the best
way to transform it into a low-cost arm. The coordination should include
network reallocation, marketing initiatives to maintain market share and
turn unprofitable routes into profitable ones.
9. The strategic turnaround of Egypt Air requires the recruitment of talented
managers in marketing, customer service, and public relations to change
public perception and attract new customer to be able to sustain future
growth and development.
10. Egypt Air should adopt an asset retrenchment strategy where areas of the
group that are underperforming are appraised to determine if its
performance can be improved or whether it is best to divest the asset
completely. This decision should be thoroughly investigated since the
divested business may be part of a total strategy involving the whole group.
11. Egypt Air should put into effect a crisis management plan based on lessons
learnt from the past political instability of the Arab spring. The plan should
include actions to be taken in case of operation disruption due to acts of
terrorism, regional conflicts and economic recessions.

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