CYPRUS Airways (CY) will today sign a loan agreement with Hellenic Bank for 78 million euros that the airline hopes will return it to profitability after several years of losses.
The agreement will be signed by CY’s new chairman Kikis Lazarides and the Executive Director of Hellenic Bank Makis Keravnos in the presence of Finance Minister Michalis Sarris, as the government is guaranteeing the loan.
Around half of the loan will go to repaying an earlier short-term loan and the remainder to implementing the airline’s restructuring plan.
Ahead of today’s deal, Lazarides has reportedly sent around a memo to all staff, his first since taking over as chairman for the second time in his career, cautioning against any complacency and warning that the airline was not yet out of the woods.
He said the loan was absolutely the last chance the company would have to take the necessary measures to make CY viable and competitive.
Lazarides said all concerned needed to work with prudence and determination to turn the airline’s fortunes around.
CY posted a net loss of £4.3 million in 2006, although the situation has improved on 2005, when net losses were £22.6 million. However, the airline has received a lot of bad press lately because of flight delays and poor service.
The 2006 report from the Association of European Airlines (AEA) showed constant delays in CY flights in the last quarter of 2006.
Lazarides reportedly alludes to the problem in his memo to staff, suggesting such delays not only caused financial problems for the company but also created an issue of competitiveness.
“Already we have entered in the summer period and unfortunately we face seriously operational problems with big delays in our flights,” the memo said, adding that punctuality was at very low levels.
These problems needed to be faced decisively and directly and in 2007 CY employees should aim to help in keeping costs down while increasing productivity.
He said this had already begun through the sacrifices that had been made already by staff under the restructuring plan.
“Teamwork, discipline and hard work are the basic elements that our vision should be composed of and you are asked to adopt these elements so we can move forward together for a hopeful future for the company,” the memo said.
