MORE job cuts are on the cards for ailing national carrier Cyprus Airways (CY) if it is to secure £60 million (over 100 million euro) in loans which is targeted at putting the airline in a stable position, a CY official said yesterday.
The airline will hear by April 20 whether it will get an urgently needed cash injection guaranteed by the government.
The Cypriot government has sought European Commission approval to guarantee a £30 million (50 million euro) loan sought by the carrier, troubled by heavy losses and cheaper competition.
This first loan will cover the needs of the action plan devised to rescue the airline from extinction. The next phase involves a further loan of £30 million as part of “restructuring aid”. This too requires the approval of the Commission before the government can guarantee a second loan.
CY Spokesman Tassos Angelis said the first loan was pretty straightforward and unlikely to create much fuss, adding the government would probably get the nod from the Commission.
“But the second loan is less simple. The EU will put terms and conditions on approving this one.”
Angelis rejected reports that the EU had set a six-month deadline for the airline to present its long term restructuring plan as well as demanding further lay-offs before approving the second loan.
“It’s the first time I hear of this. What the EU wants is to make the restructuring plan functional. They want to know that the company will survive with this plan and not collapse, making it all a waste of money,” said Angelis.
“They do not care how much staff you have, they want to know that the company can survive, and we must convince them that the measures will work.”
Asked if this would translate into further job cuts, he replied: “Yes, part of the measures will include job cuts and wage reductions over and above what was prescribed in the action plan.”
The action plan has been described by Communications Minister Haris Thrasou as unsatisfactory but enough to keep the airline afloat for a while.
“Everyone knows that for CY to be competitive, it must take more measures than those agreed. Everyone knows that. The company will have to start working on a new plan soon,” said Angelis.
CY sustained losses of nearly £37 million last year in the wake of a renewal of the fleet and the creation of its Athens-based subsidiary Hellas Jet.
The board met on Monday to discuss what to do with the subsidiary, reported to be making £1 million losses monthly.
“No final decision has been taken on Hellas Jet. A number of options are on the table. It will either be sold or closed down,” noted Angelis.
According to reports, English and Dutch firms are interested in purchasing Hellas Jet, while Helios Airways has proposed to use part of its fleet.
The government owns 65 per cent of Cyprus Airways, and two weeks ago appointed a technocrat and senior economist to the airline’s board to shake up its finances.
The 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 to the resignation of the rescue plan’s chief architect, Constantinos Loizides earlier this month.
