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Cyprus

CY needs a strategic investor, minister says

By George Psyllides

Cyprus Airways (CY) needs a strategic investor to survive in the long run, Communications Minister Marios Demetriades said on Tuesday, a day after Ryanair said it was not particularly interested in the troubled national carrier due to its legacy issues.

Ryanair was among nearly 20 companies which last week submitted a non-binding expression of interest in Cyprus Airways, now controlled by the government.

At least five are involved in air transport.

The process is a preliminary step towards any eventual binding offer by any bidder.

“The only way for one to determine whether there is real interest was to proceed with the procedure we have started,” Demetriades said.

“If there is no interest in the end, we must think what the next step is. But the company needs a strategic investor to be able to survive in the long term.”

The government will now be moving on to the second part of the procedure where interested parties will be asked to provide detailed proposals.

“Let’s allow the procedure to run its course and let’s hope someone will be found who would want to invest in the company,” the minister said.

On Monday, Ryanair boss Michael O’Leary said the company was not particularly interested in CY which has huge legacy issues: pension scheme, historic losses and may have to repay about €100 million in legal state aid

Ryanair had submitted an expression of interest in the carrier because the Cypriot government had asked them to, he added.

Demetriades said later that the it was not something the government had asked. “We encouraged them to do so if they were really interested.”

CY has struggled to survive against cheaper competitors and has been loss-making for years despite several attempts at a turnaround.

It is also under scrutiny by the European Commission over a €31.3 million capital increase in early 2013, and a €73 million rescue package by the Cypriot state in 2012 to establish whether it violated state aid rules.

 

 

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