Cyprus Mail

EC decision on CY fate ‘imminent’

CY staff protested in front of parliament holding placards that said "The country needs a national carrier".

By Angelos Anastasiou

THE European Competition Commission’s ruling on whether Cyprus Airways (CY) will have to repay taxpayer money it has received over the last five years is “imminent,” Finance minister Harris Georgiades said yesterday, reconfirming that as there has been no interest in buying the company, the government is preparing for the worst-case scenario that would involve shutting it down.

Speaking on the CyBC morning show, Georgiades explained that the “situation is extremely difficult” noting that the handling of the company’s shortcomings in recent years rendered such a development inevitable.

“Things are difficult, but this is not a new development,” he said.

“This matter is no longer a matter of what [the government] can do, but one of what has been done in previous years, following a state aid plan approved in 2007 with terms and conditions, none of which were adhered to – and a few years later a new cycle of state aid commenced without prior approval or consultation with the Commission,” he added.

Georgiades referred to a meeting he had last week with new European Commissioner for Competition Margrethe Vestager, which he said little can be expected to come out of.

“The new Commissioner assumed her duties just last week – I knew her as she had been Finance minister in Denmark prior to her appointment,” he said.

“I was able to see her on her second or third day into the job, and assured her that we are ready to do whatever is requested of us in order for the state aid plan we have submitted to be approved,” he added.

“Naturally, she did not offer any views during this meeting.”

Georgiades reiterated that a negative ruling by the Commission would equal the airline’s instant demise, but outlined a rough plan to minimise the economic shock in such an eventuality.

“Despite the obvious difficulties, we are trying to exhaust every chance of approving the plan, but do not limit our preparations to this prospect,” he said.

“We are also preparing for a negative ruling, with a view to minimising the consequences to the economy, mostly through covering the company’s 10 per cent market share, i.e. by securing the air connectivity to the main destinations, as well as securing employees’ basic rights.”

The Finance minister repeated that there has been no real interest in buying the company, but “maybe for parts of it.”

But regardless of the government’s assurances of a transparent procedure that has revealed no investor interest, opposition parties remained convinced that its plan is to sell off the company’s assets before closing it down.

“If that is the government’s decision, the right thing to do would be to tell employees and the House so that we can prepare for the consequences,” said DIKO leader Nicolas Papadopoulos.

And AKEL deputy Stavros Evagorou accused the government of breaking the law when it negotiated the sale of the company’s assets.

“The state is the owner of Cyprus Airways, and therefore the Finance minister may only negotiate the sale of equity stakes to investors – not assets,” he said.

“This is a listed company operating under private law, and its assets are the sole remit of its board of directors,” he added.

“In any other case the procedure would be illegal and subject to challenges in court.”

Meanwhile, the CY board, that recently drafted a letter to President Nicos Anastasiades complaining they were being kept in the dark of the process, have been invited to the Presidential Palace today to meet with him.

“An internal problem has come up within the board and the President immediately summoned them so that they can explain themselves,” Georgiades said.

On Tuesday, the minister had categorically denied that the board had been kept out of the loop at any stage of the process, and alluded to internal politicking between board members as the source of the conflict.

Related Posts

Large chunk of Paphos statue recovered

Nick Theodoulou

Failed second-round candidates ponder options

Nick Theodoulou

Raucous Disy meeting over whether to back Christodoulides (Update 2)

Nick Theodoulou

Data commissioner received 25 cases of election meddling

Andria Kades

Paphos mayor says Anastasiades did not dismiss Akel partnership in 2008

Elias Hazou

Cyprus-China health agreement signed

Jonathan Shkurko