CY losses down, but only due to share sale

By Jean Christou

THE CYPRUS Airways (CY) Group incurred pre-tax losses of close to £1 million for the first six months of the year compared to £3.3 million in the first half of 1998, the company announced yesterday.

But the figure conceals an actual operating loss of £4.2 million, which was offset by the sale of shares that CY held in Equant NV, an international company offering communication network services. The sale of 30 per cent of CY’s total stake in Equant brought in a profit of £2.3 million.

CY still holds some £5.5 million worth of shares in Equant NV.

The £4.2 million operating loss was also offset by a pre-tax profit of £886, 000 from the group’s subsidiary Duty Free Shops Ltd, leaving the CY group with a loss of £900,000 for the first six months of the year.

Prospects for the remainder of the year are good, according to CY, but the group is unlikely to match its £10 million pre-tax profit in 1998.

CY first half results are usually in the red due to the fact that the airline’s busiest months are in the second half of the year.

The poor results for the first half have also been put down to increased maintenance costs for the company’s 12-strong fleet and to labour costs, “which increased dramatically” despite no increase in staff numbers over the previous year.

“Based on the result of the first half and taking into account the second six-month period of every year which includes the peak months for passengers, we believe there will be an improvement on these results,” the CY announcement said.

“We also believe that, for the second year running, the company will show a profit as long as there are no unforeseen events.”

However, CY said a high rise in the price of fuel was expected to affect any profit in 1999 to the tune of about £3 million.

“This is expected to affect the results of the year so the group’s profit will be lower than the £10 million for 1998,” the announcement said.

Revenue for the group, excluding the duty free shops, for the first six months, reached £63.5 million compared to £62.7 million in the same period last year, which shows a rise of £800,000 or 1.3 per cent.

Duty free sales rose by £2.1 million pounds, or 17 per cent, in the first six months, reaching £14.7 million.

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