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Morocco's State-Controlled Airline Seeks Partner

Morocco's State-Controlled Airline Seeks Partner

Morocco's state-controlled Royal Air Maroc is seeking a larger strategic partner, a senior airline official said, as it battles to regain profitability and stand up to increased competition from low cost carriers.

April 17, 2012 3:47 by



Morocco’s state-controlled Royal Air Maroc is seeking a larger strategic partner, a senior airline official said, as it battles to regain profitability and stand up to increased competition from low cost carriers.

The cash-strapped Moroccan government bailed out Royal Air Maroc last year to the tune of $193 million and gave it an additional $900 million to upgrade itself by 2016.

The generous handout fuelled speculation among members of parliament that the flag carrier was souping itself up ahead of the sale of a substantial stake to a foreign operator.

Mehdi El Yaalaoui told Reuters on the sidelines of a Mediterranean tourism conference on the Tunisian island of Djerba late on Monday that the operator was seeking a tie-up with a larger company.

“At the moment, Royal Air Maroc is a state company but we want to go to the market. We need to partner with a bigger company, especially through finance,” he said.

“We have an idea who but I am not going to say.”

Speculation has in the past centred on cash-rich Gulf airlines such as Emirates or on Air France-KLM , which already holds a tiny stake in the Moroccan airline.

Royal Air Maroc has faced growing competition from low cost airlines since signing an “open sky” agreement with the European Union in 2006. It was also hit by a decline in tourist numbers last year, with the Arab Spring revolts spreading nearby and a suicide attack in the main tourist city of Marrakesh.

Yaalaoui said it had not been easy to adjust to the increased competition but the state airline had managed it.

“We are confronting any competition. We did our duty and we confronted the low cost airlines,” he said.

“It has been a difficult strategy. Royal Air Maroc had to drop lines, for instance its Milan-Marrakesh and Brussels-Marrakesh lines, and had to sell 10 planes and lose 1,500 employees, but we have overcome this.”

Morocco relies on Europe for much of its tourism traffic and the financial crisis across the Mediterranean has squeezed the number of tourist arrivals and hit airlines and the economy in recent years. Higher fuel prices have also knocked the bottom line.

With a relatively modest fleet of medium and long-haul aircraft, Royal Air Maroc has sought in recent years to develop Casablanca as a regional hub connecting poorly-served West African capitals to Europe and North America.

Yaalaoui declined to give 2012 financial forecasts for the airline but said it was doing better than last year.

Asked if Royal Air Maroc was likely to need another state handout this year, he said: “No.”

(Writing by Lin Noueihed; Editing by Mark Potter)



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