Cyprus Mail
Business Cyprus

CY may get EC green light if jobs and costs are cut

CY staff demonstrating outside the presidential palace earlier this week

By George Psyllides

THE European Commission seems ready to give a positive response regarding the future of ailing national carrier Cyprus Airways (CY) if a strategic investor is found and the company completes a restructuring plan, that includes shedding 320 jobs and further cuts in benefits, a government source said yesterday.

It followed a two-hour meeting headed by President Nicos Anastasiades which discussed developments, but no official statements were made.

The government source said the EU’s competition commission wants the government to complete the restructuring plan and find a strategic investor for the company.

Completing the airline’s restructure will see 320 staff, from around 560, being made redundant and cuts in benefits.

Two airlines, Ryanair and Aegean Air, have shown interest but there has been nothing concrete yet.

The plan, submitted earlier this year, called for further staff reductions and asset sales, and projected 2014 to be a break-even year for the carrier before it returned to profitability in 2015.

But it was quickly placed on the back burner after the government realised that a Commission ruling – expected by the end of the year – might force the company to pay back taxpayers’ money, effectively shutting the airline down.

The EC is meant to decide whether some €75m in taxpayers’ money given to the airline in recent years constitutes state aid – forbidden by EU competition law – and must be paid back, a decision that would instantly trigger the company’s insolvency.

Yesterday’s meeting was attended by members of the airline’s board who recently sent President Anastasiades a letter claiming they had been kept in the dark regarding the negotiations for a strategic investor and that the state was ignoring investors so it could shut the company down.

This was rejected by the Presidential Palace.

The source said that the board chairman and one member, as well as the company’s legal advisers, participated in the committee that handled negotiations with potential strategic investors.

Anastasiades reportedly told the board that no serious government wants to close a company that can survive.

During the meeting, CY staff staged a protest outside the presidential palace.

“We assembled here to try and prevent the government decision to close Cyprus Airways,” Panayiota Efstathiou said. “Cyprus Airways can survive with the right actions … by appointing the right board and management.”

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