Cyprus seeks EU approval to bail out flag carrier

CYPRUS Airways will hear by April at the latest whether they will get an urgently needed cash injection guaranteed by the government, officials said yesterday.

The Cypriot government has sought European Commission approval to guarantee a 50 million euro loan sought by the carrier, troubled by heavy losses and cheaper competition.

“We expect to hear from them either late this month or in early April,” Communications Minister Haris Thrassou told the Cyprus Broadcasting Corporation.

Cyprus Airways was hit by record losses in 2004, hit by competition from cheaper rivals, soaring fuel prices and the repayment costs of a new fleet.

“The government has put in two bids to the European Commission, one is the rescue aid for 50 million euros, which is a priority, and the second is for restructuring aid,” a Cyprus Airways source told Reuters.

The restructuring aid also amounts to 50 million euros, the source said.

The government owns 65 per cent of Cyprus Airways, and the centre-left administration, predisposed against privatisations, is likely to pull out all the stops to bail the carrier out.
Last week it appointed a technocrat and a senior economist to the airline’s board to shake up its finances.

Management of the airline plans to cut about 10 per cent of its 2,000 staff, spin off divisions and scrap loss-making routes to make the company profitable again.

But complications in its implementation led last week to the resignation of the rescue plan’s chief architect, banker Constantinos Loizides.
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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.