Please start here.   The Egyptian Daily News seems to have leaked out some information that leaves the airline and potential OEMs in a sticky position.  Other than this news item, none of the parties can freely speak or make a comment on a potentially confidential transaction.

Bombardier – A rumored order for 12 CS300 aircraft by EgyptAir would come at a great time. The program could use an order boost in 2017.  The airline would be a new customer, and as the cited article mentions, and could be replacing Embraer.  The airline’s Embraer fleet is rather young to be replaced before 10 years in service.  Why would the airline want to replace relatively young 70 seat models with larger 130 seat aircraft?

One hypothesis is that EgyptAir has been watching the success at Ethiopian and has decided to compete for connecting African traffic over Cairo rather than Addis Ababa.  Ethiopian’s model can be copied by acquiring an aircraft with the range to reach far west across the continent and bring connecting traffic into Cairo.  That traffic can then be funneled across the world, especially to Asia.  One could see how a CS feeder operation might work well with the 787s also apparently being considered.

Boeing – selecting the 787 makes sense for the airline because the 787 offers great range enabling Cairo to connect with far-flung markets with an appropriate capacity for this market.  The 787 is likely to replace their existing 777-200ERs.  From a capacity standpoint, this might suggest the 787-9, which is an excellent performer and in many ways an ideal 777-200ER replacement.  Going from two to six in this category suggests route expansion and opening new markets.

Airbus – selecting more A320s makes sense given the airline’s aging A320 fleet.  Since we expect any A320 order to be neos, this provides the airline with better range to serve markets deeper in Africa (especially to the south) and cover the EU.  As a state-owned airline, fleet decisions could be influenced in a way that serves national interests.  Which is to say, keep the US and EU on the friendliest of terms.  There are several places in the world that have airlines operating 737s and A320s.

The source also describes the airline Chairman seeking financing for these deals. It is peculiar that the airline’s fleet plans were leaked in this way.  Indeed, citing the Chairman in the story suggests that the information comes from well-placed sources.  We have asked the airline for comment and will follow-up this story should any further news be forthcoming.

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