20110923
Reuters
RABAT (Reuters) - Morocco's cash-strapped government has offered flag carrier Royal Air Maroc 1.6 billion dirhams to shore up its finances hurt by growing competition, lower sales and higher fuel prices.




The funds are part of a 9.3 billion dirhams package covering 2011-2016 to help the state-controlled airline cut its workforce by 30 percent to around 4,000, renew its fleet to reduce fuel consumption, and revamp its operations, an official source told Reuters.

"The 1.6 billion dirhams should boost the firm's capital so that it can meet its financial obligations and increase its investment capacity," said the source familiar with the plan.

The carrier has been racking up losses close to 80 million dirhams per month this year after revolts in some Arab countries and a suicide attack in the main tourist city of Marrakesh hit traveller numbers into Morocco.

"The surge in fuel prices coupled with fierce competition from low-cost carriers under the Open Sky agreement with the European Union have added more pressure on the company," the source said.

Royal Air Maroc said it would be able to save 1 billion dirhams, or 83 million dirhams per month, mostly from the reduction in its staff.

It also plans to raise about 1 billion dirhams from the sale of 10 aircraft including four Airbus 321 and five Boeing 737-500 to reduce to five years the average age of its fleet.

The airline declined to explain why it chose to sell all of its four Airbus aircraft, five years after they started to be delivered, and what the sale entails for its future aircraft purchases.

Before it ordered the four Airbus in 2001, Royal Air Maroc had traditionally been faithful to rival Boeing.

"As of 2012, our medium-haul fleet is projected to include the new generation of Boeing 737. For the long-haul, we will keep Boeing 767 until the delivery of Boeing 787 (Dreamliner)," the airline said in emailed responses to Reuters questions.

It will take delivery next year of two out of four Boeing Dreamliner aircraft it has ordered along with at least five 737-800 aircraft.

With a relatively modest fleet of around 40 medium- and long-haul aircraft, Royal Air Maroc has sought in recent years to develop Casablanca as a regional hub connecting mostly poorly-served west African capitals to Europe and North America.

Royal Air Maroc's financial troubles have revived speculation the government may want to sell a minority stake in the company to major competitors such as Emirates or Air France-KLM but the source said such plans "are not on the current government's agenda for now".