VZCZCXYZ0018
RR RUEHWEB

DE RUEHEG #2575/01 2311420
ZNR UUUUU ZZH
R 191420Z AUG 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 6582
INFO RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS CAIRO 002575 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR ELA 
EB FOR CBA, TRA 
COMMERCE FOR ADVOCACY CENTER 
 
E.O. 12958: N/A 
TAGS: EAIR ECON PREL EG
SUBJECT: BOEING SCORES SUCCESS IN EGYPT AIR LONG-HAUL 
ACQUISITION 
 
Sensitive but Unclassified.  Please protect accordingly. 
 
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Summary 
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¶1. (SBU) Continuing the augmentation and upgrading of its 
long-haul fleet, Egypt Air has agreed to lease six Boeing 
777-300R aircraft, with the possibility of a direct purchase 
or lease of two more.  The decision follows shortly after the 
airline concluded an agreement with Airbus to lease two A330s 
and purchase five more. Egypt Air's agreement to lease the 
six 777s is a success for Boeing in the face of a long list 
of potential Airbus advantages in the Egyptian market.  End 
summary. 
 
------------------------ 
Egypt Air Adds Six 777's 
------------------------ 
 
¶2. (SBU) During the week of August 5, Egypt Air signed a 
Letter of Intent (LOI) and placed a deposit with GE 
Commercial Aviation Services to lease six Boeing 777-300R 
long-haul aircraft.  According to airline and Boeing Company 
contacts, the possibility for the direct purchase or lease of 
two additional 777s remains on the table.  The parties 
anticipate concluding the lease contract within the next 
30-60 days.  The decision by Egypt Air to lease the six 
Boeings follows shortly after the airline concluded an 
agreement with Airbus for the leasing of two A330s and the 
direct purchase of five more.  The acquisitions are part of 
Egypt Air's efforts to augment and upgrade its long-haul 
fleet to handle expanded passenger and cargo links with 
far-flung partners, primarily in Asia. 
 
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Ambassador Advocates 
-------------------- 
 
¶3. (SBU) In a July 24 meeting, the Ambassador, joined by the 
Commercial Counselor and Econoff, engaged Minister of Civil 
Aviation Air Marshal Ahmed Shafik on behalf of the Boeing 
bid.  The Ambassador reiterated the advantages of the 777 vs. 
the A330 with regard to range, efficiency, and cargo 
capacity, and noted the synergy between the aircraft's 
capabilities and Egypt's growing trade with long-haul 
destinations in Asia.  The Ambassador also noted Egypt Air's 
stated desire to have a balanced fleet of Airbus and Boeings, 
and that the airline's current weighting in favor of Airbus 
was at odds with that goal and with international norms for 
long-haul aircraft.  Egypt Air currently operates five Boeing 
777-200ERs, seven Airbus A330s, three A340s, and four A300 
freighters; an anomaly considering that among all 
international operators Boeing enjoys an approximate 75/25 
advantage.  The meeting followed-up on the Ambassador's 
earlier message accompanying the delivery of Secretary of 
Commerce Gutierrez's letter in support of the Boeing bid. 
 
¶4. (SBU) Shafik said that Egypt Air was "in bad need of 
Boeing's help," ostensibly referring to their desire to 
expand long-haul and cargo services deeper into Asia.  Shafik 
told the Ambassador that Egypt Air was very happy with the 
roll-out and performance of their 737-800's, and that Boeing 
had been a "very cooperative" partner in the deal.  Shafik 
noted that he hoped that Boeing would be able to provide an 
expedited delivery schedule, as Egypt Air was seeking to 
incorporate the aircraft in the fleet as soon as possible. 
 
¶5. (SBU) Aside from cooperation on commercial aircraft, 
Shafik implored the Ambassador to encourage U.S. investment 
and competition in the aviation sector more broadly, and said 
he will issue instructions to all of his departments to 
ensure that American firms are encouraged to bid on projects 
in aviation services, management, retail, and infrastructure 
development.  He said that boosting tourism was at the core 
of Egypt's aviation-related activities, and he wants American 
companies to enter and compete in this market.  In response, 
FCS has arranged for a TDA-sponsored definitional mission to 
visit Cairo in early September to explore project 
opportunities in the sector. 
 
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Comment 
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¶6. (SBU) Egypt Air's agreement to lease the 777s is a success 
for Boeing in the face of a long list of potential Airbus 
 
advantages in the Egyptian market.  The A330 retails for USD 
80 - 95 million less that the 777, is available for delivery 
a full year earlier, and Egypt Air already operates an A330 
engine maintenance shop in Cairo.  While the 777 outperforms 
the A330 on capacity, range, and cargo, the A330 is "good 
enough" to service some of Egypt Air's expanding services to 
the Indian sub-continent and Southeast Asia.  In addition, 
Airbus is able to "take back" directly Egypt Air's aging 
A340s, whereas Boeing would have to arrange for the disposal 
of its older 777-200s though a third party.  The GOE and 
Egypt Air are happy with the performance of their current 
fleet of Boeings, however, and recognize the role the 777 can 
play in expanding trade ties with China.  The Embassy will 
continue to work with Boeing to encourage Egypt Air to focus 
on the greater revenue generating potential of the 777 and 
the need to increase the proportion of Boeing's in its 
long-haul fleet. 
RICCIARDONE