EgyptAir Cargo intends to invest EGP 1.98bn to replace and renew its cargo until the end of the fiscal year 2020/2021.
Chief Executive Officer Bassem Gohar said that the company supports exports through a tripartite agreement with the Agriculture Export Council (AEC) and the Export Development Fund (EDF) of the Ministry of Trade.
He noted that, according to the protocol, the company is committed to facilitating seven weekly trips to Europe, including four to Germany and three to Belgium at predetermined prices ranging from $800-850 per tonne, next to the spaces on commercial flights to England and France.
He explained that the prices are subsidised by the Trade and Industry Ministry in support of exporters, explaining that the price of shipping did not change following the floatation of the pound in November 2016, while the prices of ground services increased by 10-15%, which does not match the cost hikes.
Gohar said that the company has three planes, two Airbus A300-600 and another A300B4 with a capacity of 40-42 tonnes.
He explained that the company has formulated a development plan on two divisions: fleet and infrastructure, where the company intends to replace and renew the existing aircraft with three new Airbus 330, that will turn from commercial to cargo airliners. The first will be received in June and the other in October this year.
He added that the third plane is scheduled to arrive in May 2019 with a capacity of 58 tonnes. The company also plans to add two smaller B737-800 planes each with a capacity of 20-22 tonnes to serve the African market.
Moreover, he said that the new planes will add 30% more cargo capacity, as the average loads now range between 40 and 42 tonnes, against 58 tonnes in the new planes.
He pointed out that the company plans to invest EGP 1.98bn through the end of fiscal year 2020/2021, including EGP 1.19bn in the coming fiscal year, EGP 393m in FY 2019/2020, then EGP 398m in the last fiscal year.
On the investment plan at the level of infrastructure, Gohar said that the company plans to invest EGP 275m in the coming fiscal year to add 15,000 sqm of storage.
He explained that the new space contributes to increasing the storage capacity of refrigerated products by 415%, 100% for live animals, and 34% for precious goods.
He explained that the total weekly exports transported by the company to the European market via cargo planes reach about 280 tonnes, next to 240 tonnes on commercial flights to Paris, Frankfurt, and Amsterdam.
He added that these quantities are the minimum air transport, where flights during the peak season carry six daily trips during December and January.
Gohar estimated the volume of goods shipped from Alexandria, Cairo, and Luxor in FY 2015/2016 at 202,700 tonnes of exports and 115,200 tonnes of imports, then up by 8% in FY 2016/2017 to 219,800 tonnes, while imports fell to 113,160 tonnes.
He predicted air cargo transport to grow by 30% following the expansions of the company.
The market share of EgyptAir Cargo is estimated at about 62% of the Egyptian air shipment market. The Arab and Middle East region accounts for 56%, Europe for 33% and the US and Africa for 11%.
Agricultural crops account for 79% of total transported goods, especially green beans, grapes, strawberries, and peaches, since they are perishable products and do not tolerate transshipment for many days, unlike citrus.
Gohar noted that the bans on some Egyptian products adversely impacted the company, where shipments to Arab countries dropped by 30% following these decisions.
He pointed out that the company is interested in the African market and a trip flies to Chad every 10 days, next to three weekly flights to South Africa with a capacity of 12 tonnes per flight.
He explained that the problem facing exporting to the African market is that all passenger planes to Africa are small, except for South Africa, so it is difficult to exploit the cargo space inside the planes.
He added that the export volume of the African market is small and cannot have separate flights, especially as they return empty due to weak trade with African countries, unlike the planes to Europe.
He stressed that the entry of the new fleet of aircraft helps to solve the problem, especially when operating the two B737-800 planes that have capacities of 20-22 tonnes.
EgyptAir Cargo has invested about EGP 20m since 2011 to increase inspection devices, next to EGP 40m to establish a new building, and EGP 30m for other equipment and devices, along with EGP 3.4m for surveillance cameras.
On the resumption of flights between Egypt and Russia, Gohar said that two weekly charter flights have been flying to Moscow since December.
He pointed out that cargo on commercial flights will be used in the first phase after the resumption of flights, adding that the company could operate special lines if demand is increased, noting that Russia is listed in the tripartite agreement.