CYPRUS Airways (CY) incurred unprecedented pre-tax losses of £36.9 million in 2004 compared to £29 million in 2003, the company has announced.
Losses after tax amounted to £31.2 million compared a net loss of £20.9 million in 2003. Consolidated group revenue, excluding the revenue of the associated company Cyprus Airways (Duty-Free Shops) Limited, reached £201.4 million in 2004 compared to £187.8 million in 2003, registering an increase of £13.6 million or 7.3 per cent.
CY said revenue had increased as a result of the inclusion of its Athens-based subsidiary Hellas Jet’s revenue for a one complete economic year in comparison with the previous year, in which the company operated for six months only. CY is now trying to sell Hellas Jet.
However operating expenditure reached £236.7 million in 2004 compared to £223.8 million in 2003, an increase of £12.8 million. This was mainly due to the increase of Hellas Jet expenses by £11.2 million.
“Excluding the operating expenditure of Hellas Jet S.A., the expenses of the other companies of the Group increased by £1.7 million. Despite the material increase of the fuel cost, many other expenses of the Group were restricted,” the airline said.
The turnover of CY’s associated company, Cyprus Airways (Duty-Free Shops) Limited, decreased by £12.4 million to £44.4 million in 2004, in comparison to £56.8 million in 2003. The Duty Free Shops had always been the most profitable of CY’s affiliates but Cyprus’ accession to the EU last May sounded the death knell for a large chunk of duty free profits.
“The Company’s profitability was also negatively affected for this reason and accordingly the Group’s share of profit from the associated company, before tax, fell to £1.9 million for 2004, in comparison to £7.0 million for 2003,” CY said.
The airline said the difficulties would continue in 2005 but hoped its controversial strategic plan would return the airline to profitability by the end of 2006.
“The action plan relies on six pillars, which refer to the flight network, the fleet composition, the commercial policy, the organisational structure, the Group structure and the cost reduction including the staff costs,” CY said.
“As already announced the company has begun the progressive application of the six pillars of the action plan, while it assess other measures on the same direction.”
The successful application of the plan will also ensure that CY obtains a loan guarantee from the government that will enable it to survive in the short and medium term, the airline said.
