CYPRUS AIRWAYS (CY)is reducing capacity for 2009 by 57,000 seats due to the global crisis, Executive Chairman Kikis Lazarides said yesterday.
“This has led to an increase the occupancy rate to 65.3 per cent compared with 62.9 per cent in the corresponding period of 2008, thus limiting the damage by increasing our performance,” Lazarides told shareholders at the airline’s Annual General Meeting (AGM.
He said in the first quarter of this year, passenger traffic had fallen by 23,000 compared to the same period in 2008.
“Undoubtedly the picture this year is not the same as last year due to the crisis,” Lazarides said.
“Against this background we have implemented a more aggressive trade policy with very attractive offers to popular destinations, which reinvigorates interest both Cypriots and foreigners from various markets.”
He added: “At the same time, however, competition is becoming harder than ever.”
Speaking about CY’s fleet renewal, Lazarides said the airline was continuing with partial replacement of its existing Airbus A320s.
He said that last November CY received the A319 which it will lease for the next eight years at an attractive price.
Three weeks ago it also signed an agreement with an Irish company to lease a brand new A320 for 45 months from February 2010.
“As already announced it was not possible to sign rental agreement for two new Airbus A320s for eight years under the Letter of Intent agreed last February, due to failure of the leasing company to to deliver the aircraft within the timeframes set out that July and August 2009,” said the CY chairman. He also said the airline was at an advanced stage in negotiations with another such company and there were very good indications that a deal would be reached soon to lease two more A30s around the same age for 2010.
On the other side, the airline was proceeding with the sale of some of its older A320s.
“Already one has been sold and delivered for $5.6 million and two others have also sold, but yet to be delivered to the same purchaser and at the same price,” said Lazarides.
He said the partial fleet renewal would bring significant benefits to the company.
“There will be major savings in maintenance costs of aircraft and fuel costs,” he said.
CY made a profit for the second successive year in 2008, despite a huge increase in fuel costs and the added financial burden caused by its “tired out” fleet of aircraft.
The airline made a net profit after tax of €1.7 million in 2008, up from €1.2 million the previous year. The relative financial health of the airline follows four years of carrying losses of around €150 million on its balance-sheet, which at times threatened to put it out of business altogether.
In the course of last year, CY had to pay an extra €29 million in fuel costs compared to 2007, and the poor state of its fleet resulted in a further cost of €8 million to hire replacement aircraft when its own were being repaired. Another €2 million was paid out in compensation to passengers for cancelled flights.
