Cyprus Mail
Cyprus

‘Hefty job cuts, sale of assets needed to save CY’

By Angelos Anastasiou
The survival of Cyprus Airways requires hefty job cuts and the sale of its remaining assets, the chairman of the carrier’s board Marinos Kallis told MPs on Tuesday.
With the threat of a negative ruling by the European Competition Commission over some €80 million in state funding it received in recent years looming large, the airline must implement a demanding restructuring plan in a few short months, after years of partial implementation.
“The goal is to restore profitability and strengthen the case before the European Competition Commission ahead of its ruling,” Kallis told the House Ethics committee.
The committee convened to discuss the appointment of Kallis’ predecessor Makis Constantinides, who resigned last month after he found himself unable to cooperate with his board.
A former boss of Hermes Airports, a consortium of local businessmen that manages both airports in Cyprus since 2006, Constantinides was suspected of having a conflict of interest after he settled a disputed claim between Hermes and the airline, allegedly in the consortium’s favour.
In the aftermath of his resignation, new chairman Kallis said ticket sales are plummeting due to the negative publicity given to Cyprus Airways.
Although losses are consistently falling and liquidity is available, the company cannot survive for long, Kallis told lawmakers.
“The restructuring plan submitted to the European Commission must be implemented fully,” he said.
“That means reducing staff from 550 to 385, cutting salaries by 12 per cent, and adjusting provident funds,” he added.
He noted that the company’s assets must be liquidated, meaning the catering and cargo departments, as well as its stake in Swissport, will be sold.
And if necessary, the company will sell its remaining plane and examine the prospect of changing its flight schedule.
“Doing the above will allow us to renegotiate a new extended timeframe with the European Commission with a view to attracting a strategic investor,” Kallis said.
“Restoring profitability, even marginally, will make the company more attractive to potential investors,” he pointed out.
A search for a strategic investor to take over the distressed airline over the summer failed as the only suitors deemed genuinely interested were Aegean Airlines and Ryanair, both of whom rejected any talk of buying the company, proposing that they buy assets instead.
Kallis told the Ethics committee that despite the board’s efforts “the situation is extremely difficult.”
“The aim is the sale of Cyprus Airways, but in order for the company to survive it must acquire liquidity,” he repeated.



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