‘CY will survive’

Thrasou makes public pledge to save national carrier

CLOSING down Cyprus Airways (CY) is not an option despite the current crisis in the airline, Communications and Works Minister Haris Thrasou said yesterday.

Thrasou called on all sides in the CY dispute to pull together and said it was not the time to question the board or think about replacing it.

His comments came a day after the Labour Ministry’s mediation service put forward a proposal to the company outlining a possible solution to help move forward a strategic plan that is vital if the airline is to survive. Both the unions and management must respond to the proposal, which came out of a week of intense negotiations, by December 7.

Thrasou said the government would not allow the airline to close, nor would it be sold off, he said. “The message to everyone is that the company must survive,” he told reporters yesterday.

The Minister also commented on the leaking of a letter last week, written by four members of the seven-man board questioning the decisions and competence of the chairman.

He said the government disagreed with that type of approach. “We repeat the message to both sides to leave the board of directors and the unions to find a solution,” Thrasou said.

Asked if the government was happy with the current board’s handling of the airline’s problems, and if there would be a reshuffle, he said: “We are not one hundred per cent satisfied with the whole situation but we believe now would be untimely to put such a proposal while the company was going through a crisis.”

“The most important thing now is to implement the strategic plan.”

The company needed £25 million worth of concessions from the unions in order for it to survive. CY lost £30 million in the first half of this year and prospects for the second half are bleak.

The strategic plan provides for redundancies, pay and benefits cuts, reduction of the fleet, axing routes and outsourcing certain services but the unions and management were unable to agree between themselves after months of meetings.
However following a week of intense negotiations between the Labour Ministry and each of the five unions separately, a proposal was finally formulated on Sunday and given to all sides.

The proposal calls for a suspension in wage hikes for 2005 and 2006, axing sick-leave benefits, the reduction of Sunday overtime pay by 50 per cent, a reduction in wages of management personnel and pilots by five per cent for those earning under £30,000 and a reduction of 10 per cent for those earning more than £30,000.

Social insurance contributions should be increased from 3.2 per cent to 6.3 per cent, the proposal said, and the catering menu should be simplified, which would result in being able to reduce staff in that department by 20. It also said the Paphos airport engineering department be integrated with Larnaca and that staff levels there be re-evaluated.

There is also a proposal to axe overnight stays by pilots and crew on eight routes, including Manchester, Birmingham, Amsterdam and Stansted, and to change the ‘official’ place of work to avoid paying staff travel expenses.
Concerning the proposed redundancy of 12 pilots, the proposal is to keep them on as staff under suspension. The pilots union PASIPY had originally rejected this proposal when it was made by the company.

The proposal of the Ministry also provides for adequate compensation for any staff that will be made redundant.

Reports yesterday said that at first glance the unions were not overly thrilled by the proposals, saying the majority of them represented the demands of the company rather than the unions.

Costas Demetriou, the chairman of the airline’s biggest union CYNIKA said yesterday he did not want to comment on the proposal before it was discussed by members. “We have given a copy to all branch members and it will be discussed on Thursday,” he said.

CY spokesman Tassos Angelis said: “We are going to assess the cost and evaluate the proposal to see if it’s viable so that a decision can be made the soonest.”

The airline’s board was to meet yesterday afternoon ahead of the extraordinary general meeting of shareholders last night. The shareholders were being asked to endorse the strategic plan.