Cyprus Mail

Cyprus Airways braces for EU decision

By Constantinos Psillides

Negotiations for the sale of Cyprus Airways (CY) seem to be heading for a dead end.

The nine companies currently short-listed for acquiring the ailing carrier, according to reports, appear to be put off by a pending EU Council decision, regarding a €73 million rescue package the company received in 2012, and a €31.3 million capital increase in early 2013.

The EU Council is set to decide whether CY has to return that money to the state, which would result in the company shutting down its operations.

While CY bosses and government officials were initially optimistic on the outcome of the bidding, daily Phileleftheros reported that news from Brussels was not good and that CY might be headed for closure.

CY chairman Makis Constantinides was called on Wednesday to present the current situation to the cabinet. According to reports the meeting did not have a positive outcome. Asked to comment on the subject, deputy government spokesman Victoras Papadopoulos merely said that “the president was informed on the current state of affairs regarding Cyprus Airways.”

CY officials will now have to wait for EU Competition Commissioner-designate Margrethe Vestager to take office, so they can have their answer.

The airline has no liquidity left, with the exception of €31 million acquired after the sale of time-slots at London Heathrow.

Constantinides told the cabinet the money should only be used in case of emergency. With the summer season coming to an end the airline will be hard-pressed to come up with money to cover operational costs.  He said that if the sale negotiations took longer than expected the money should be used to pay for keeping CY afloat until an agreement is reached.

The deadline for the negotiations to be concluded is October 27.

President Nicos Anastasiades and Finance Minister Harris Georgiades also met this week with Ryanair CEO Michael O’Leary, one of the bidders.

O’Leary has publicly stated that he believes that the bid will eventually go to Aegean Airlines, another major competitor but despite this, Ryanair has already applied Cyprus Air Operator Certificate (AOC), which would allow it to set up a subsidiary airline on the island.

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