LOSS-making Cyprus Airways (CY) must undergo radical changes if it is to survive, warned President Tassos Papadopoulos yesterday, saying that the state would no longer subsidise the ailing national carrier. He also pointed the finger at the previous management for the company’s current financial crisis.
Speaking in an interview with Phileleftheros, the President warned that the company could not survive economically unless it made radical and not cosmetic changes, hinting that the government could no longer bankroll its losses.
“There are also the rules of the European Union and Stock Exchange to take into account. The government cannot subsidise the carrier or guarantee new loans. The EU won’t allow it,” said Papadopoulos.
Referring to the company’s action plan to be discussed this week, he stressed that drastic measures would have to be taken for the airline to survive in the new environment.
“This is why we are waiting for the action plan, which has to be convincing. It will include painful measures. The measures to be taken have to be painful,” he added, in a possible reference to job cuts.
Asked how long the carrier would survive without these changes, Papadopoulos replied: “I don’t know, but it cannot survive”.
The long-awaited action plan to bail out the flagging national carrier from a deepening crisis was put on hold last week after marathon meetings between the government and its board of directors ended inconclusively.
Communications and Works Minister Haris Thrasou said yesterday that the action plan would be discussed by the board this Wednesday and Thursday, before being presented to the ministry next Monday. Thrasou said the aim of the plan was to make CY a profit-making company.
Asked why the rescue plan for the airline had delayed so long, Papadopoulos explained that an action plan could not be formulated until the company conducted an inquiry into previous failings.
The airline had hired experts to examine three areas: the tender process, the controversial change of fleet and the employee structure, but ran into delays.
According to the President, the main reason for this was the refusal of former CY chairman, Harris Loizides, and most members of the previous board to co-operate with the investigation into the purchase and sale of aircraft.
In order for experts to get hold of minutes, documents and studies related to the replacement of the CY fleet, the government had to appoint an official investigator, obliging the former management to co-operate, said Papadopoulos.
“The company’s weaknesses today are the consequences of decisions taken previously,” he said.
The President went on to explain that the company was just now starting to pay off the new fleet purchased by the previous management. He highlighted one example of bad management noted in the report. “One aircraft was bought for millions more to secure 45 extra seats on the plane. Even if these seats were filled on every flight, 365 days a year, it would not cover the price difference because you have to pay higher insurance, higher landing fees and maintenance costs, and use more personnel. So why do they need these 45 extra seats?” asked Papadopoulos.
