CYPRUS Airways (CY) may have been able to offer a slightly improved loss forecast for 2005, but the airline warned yesterday that it was operating in an uncertain environment.
In a report from the company to the Cyprus Stock Exchange detailing its revised figures, CY said the group’s future performance was subject to a variety of factors, some of which were within and some beyond its control.
“There are important areas, such as the intensity of competition, changes in economic conditions, fluctuations in currencies and interest rates, the price of jet fuel, acts of terrorism or war and upheavals in labour relations, all of which are not within the Group’s ability to influence to any great extent and which have the potential to derail the effort to achieve long-term viability for the Group,” the report said.
“The dangers which may arise from unexpected external factors such as competition, the price of fuel and the higher charges arising from the change of status of the Larnaca and Paphos airports, as well as political instability in the Middle East, cannot be ignored.”
CY said it was operating in a highly competitive environment which was experiencing and would continue to experience significant structural changes.
It added that the successful implementation of CY’s restructuring plan was the main determinant of its future.
“Provided that the savings included in the Restructuring Plan are achieved, with the sale of Eurocypria and the financial support of the government of the Republic of Cyprus, within the provisions of EU regulations, the Board of Directors reasonably expect the Group to continue to operate as a going concern,” the airline said.
The airline has been able to revise its pre-tax loss to £24.53 million in 2005, slightly less than the £25.03 million forecast and significantly less than the £41.3 million loss in 2004.
The main reason for the improvement in the group’s performance was the reduction in the loss of its Athens-based carrier Hellas Jet to £5.5 million from £12.3 million in 2004, as well as the fact that last year the Group incurred an impairment loss relating to its investment in Hellas Jet of £7.6 million.
During 2005, the Group had other operating income of £4.1 million, the net result from the profit on disposal of one A320 aircraft and spare engine.
The results of 2005 also include the redundancy compensation of £3 million paid to employees who left the airline during the early part of the year as part of the rescue package.
“Finally, part of the improvement in the year’s financial results reflects the efforts exercised by the Group to improve its financial performance which are continuing during 2006 with the implementation of the restructuring plan,” CY said.
“The group’s primary focus in the current and following year is the full implementation of the plan submitted to the European Commission in January 2006, which is expected to ensure its long-term survival.”
