By Stefanos Evripidou
UNIONS WERE up in arms yesterday after the Cyprus Airways (CY) board decided to send out redundancy letters to 203 employees, despite agreeing earlier in the morning to postpone the measure until Friday.
The CY board announced last week plans to make redundant 203 staff yesterday as part of the airline’s rescue plan, which includes in total redundancies for 490 of the 1,040 staff plus the reduction of its fleet by four aircraft to six.
If fully implemented, the redundancies will save the airline €12m by the end of the year, seriously reducing expected losses for this year of over €40m for the ailing company.
CY Board Chairman Antonis Antoniou met with unions SEK and PEO yesterday morning where he agreed to hold off sending redundancy letters until after the unions had a chance to meet with President Nicos Anastasiades this Thursday.
The unions had argued that, even if sent this Friday, the letters could have retroactive application, starting from yesterday.
After getting Antoniou’s initial agreement, they held a general assembly where it was decided to hold off any industrial action.
However, by afternoon, Antoniou changed his mind after hearing legal advice and went ahead with the first batch of involuntary redundancies.
The response of SEK and PEO was to call for a protest of CY staff outside parliament this morning, where the House Finance Committee has called an ad hoc meeting to discuss the latest developments with the national airline. No strike measures were called, with unions saying they will wait until seeing the result of the meeting with the president.
The unions object to the airline’s about-turn on offering extra compensation to those made redundant, over and above what they will receive from the provident and redundancy funds.
The airline, represented by its main shareholder the government, had agreed with unions on April 12, to pay staff made redundant half of the extra compensation initially demanded by the unions.
When the CY board claimed the airline simply didn’t have the assets to make up the €20m needed to pay the agreed compensation, the government replaced the board, putting Antoniou in charge.
He soon adopted the same line as the previous board, that there was no money to pay the added compensation. This time, the government listened and the decision was taken to begin implementation of the rescue plan for CY immediately.
Speaking at a press conference, Antoniou explained that he received legal advice that the company would be liable to pay the salaries of staff made redundant from the day they received the letter, not from the date stated in the letter.
In other words, the airline would pay an extra week in salaries, which would be like throwing money down a hole, said the chairman.
Which taxpayer would agree with that, he asked.
The remaining letters will be sent within two months to ensure that 490 staff will be made redundant, from which only 68 are voluntary redundancies. None will be given added compensation.
“The CY board has taken a very bold and decisive step,” he said, noting that implementation of the redundancy package which for various reasons had remained on the shelf and threatened the airline’s existence, had finally begun.
Antoniou argued that every month since last year when the rescue plan was prepared, the airline was incurring losses of over €2m by not going ahead with redundancies, costing the company millions of euros.
The chairman argued that the company had no choice, since the cost of not implementing the decision was too great for the airline to bear.
He argued that the decision was a one-way street for saving the company. If the rescue plan fails, it will be the airline’s last, he added.
Antoniou said the company also planned to shut down domestic flights within Greece, saving the airline a further €2m a month in losses.
The €12m to be saved from the domestic Greek routes over the next six months, coupled with the €12m from redundancies means that CY will save €24m in the second half of the year, significantly reducing the €40m losses it is estimated it will incur in 2013, he said.
The company is also considering moving its headquarters to Larnaca.
Had these measures been taken at the start of the year, the airline might have had a chance of breaking even, said the chairman.
Finance Minister Harris Georgiades yesterday said the situation was at breaking point for the national airline.
“Things are very difficult,” he said, noting the company had to sell planes and time slots to meet operational costs, adding that the Cypriot taxpayer was propping up the airline on a monthly basis at a huge cost.
The minister did not rule out closing down the company and re-opening it under new management and control.