CYPRUS Airways (CY) has been ranked second in the race for Greece’s ailing carrier Olympic Airways, but chairman Haris Loizides said yesterday they had no intention of entering a bidding war.
On Friday the Greek government’s privatisation advisers, Credit Suisse First Boston, announced that it had submitted its recommendation to the Greek government but did not disclose its content.
However Loizides told the Sunday Mail that the entire Credit Suisse report had been leaked to the press in Greece, and that chunks had been publicised in the papers and on radio stations yesterday.
He said that according to the information he had received from Greece, nearest rival Axon Airlines were in first place with 17 points and CY second with 14 points.
“The report says the short-listed candidates were Axon and Cyprus Airways,” Loizides said. The third of the four bidders, Australian venture capital firm Integrated Airline Solutions, had received nine points, firmly placing Axon and CY as the only clear contenders.
“We have been marked better in nearly every category but worse on the issue of the price being offered,” Loizides said. “That was the only area we were marked poorly on. But on our business plan and viability we were marked better than everyone else. That’s why we came second.”
CY wants 51 per cent of Olympic for 50-70 million euros (£30-£40 million) and plans to keep 5,500 staff. Their business plan is seen as conservative. They have located some of the funds and are looking for the rest, reports say.
Axon also wants to buy 51 per cent, picking up most of its assets for 90-110 million euros. In addition, its proposal includes paying an extra 130 million euros to the state for the transfer of assets to New Olympic. It plans to keep more than 4,000 staff. Its business plan, which keeps most long-haul flights, is considered “quite serious” and Axon plan to finance it via a share capital increase.
Both airlines want the Greek government to put up its share of funding for the remaining 49 per cent of Olympic. Banned by European Union law from pouring more cash into the debt-ridden airline, the Greek government is selling 51 to 65 per cent of the airline to ensure its survival.
All four proposals anticipate the creation of a new company, ‘New Olympic’, which would assume the assets but not the liabilities of the old Olympic group.
Government officials have indicated clearly that a good overall business plan ensuring the continuity of Olympic’s name and operations would weigh more than the financial offer. None of the bidders is interested in subsidiary Olympic Catering, all plan to drop flights to Australia, and they also propose different ways of financing their plans. Most want to cut Olympic’s estimated 8,000 permanent and 3,500 temporary staff
Speculation is rife that the Greek government may not pick just a single preferred bidder, as expected, for a majority stake but could negotiate with more than one at the same time.
“The Greek government will now decide whether to start negotiations with Axon only or with us, or with us and with Axon,” Loizides said. “Our position is that we are not willing to enter into an extended negotiation process or a bidding process.”
“If they want to negotiate with us well and good, but if they want to negotiate with Axon and us we are not willing to accept that.”
He said there had been hints that CY and Axon might join forces, but Loizides ruled out any change to the business plan which had been drawn up and which he said had also been approved by Alitalia Airlines, which has joined the CY consortium.
“Whatever we do it’s crucial that our business plan, which we drafted very carefully with specific steps that need to be taken, and which was also more or less approved and adopted by the Alitalia team, remain intact,” Loizides said.
He added that Cyprus Airways was pleased to have made the shortlist. “All the rumours that our bid wouldn’t make it because of the low funding offer have been proven wrong,” Loizides said. “Now it remains to be seen what the Greek government is willing to do.”
Athens is expected to identify one preferred bidder early this week.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
