AN END to the row between Cyprus Airways (CY) and Eurocypria appeared to have been brokered by Finance Minister Charilaos Stavrakis following separate meetings he had yesterday morning with the two state-owned airlines’ boards.
The meetings’ participants agreed to set up a five-man committee to deliver an action plan within four weeks, aimed at resolving the main financial and operational issues that exist between the two companies by proposing practical and mutually-beneficial co-operation measures. The committee was to be made up of one representative from each of the two airlines and three Finance Ministry officials.
However, the peace proved short-lived. In the afternoon, CY announced that it could not “have anything to do with such a committee”, as under EU rules the two companies “are obliged to operate independently of each other on the competitive level”, and any such co-operation “could be perceived as collusion”.
Speaking to the press after the morning’s meetings, Stavrakis said that the committee would focus on three areas: the government’s share of the two companies’ capital, which currently stands at 70 per cent of CY and 100 per cent of Eurocypria; the strategic choices which might allow both companies to prosper; and possible operational synergies and co-operation which might reduce costs and increase revenues. Stavrakis emphasised that any proposals by the committee would have to comply with EU competition rules.
On the first point, the Minister said that any decision on injecting further share capital into Eurocypria – a figure of €35 million has been mentioned – will depend on his Ministry being convinced that the airline has a viable future. He added that a final viability plan would also be expected to include cuts in the salaries of the airline’s more highly-paid employees.
Regarding the issue of routes, Stavrakis said that charter-flight operator Eurocypria had given a “very significant assurance” that “it will not enter the scheduled flights sector, which is the area of operations for Cyprus Airways.”
The third and most contentious of the committee’s areas of focus – identifying ways in which the two companies might rationalise their respective operations on a co-operative basis – now appears dead in the water following CY’s withdrawal.
[SIDEBAR]
The Finance Minister made an extra effort to boost Cyprus’ air traffic yesterday. Stavrakis met a delegation from China’s main parliament – the National People’s Congress – in his capacity as acting Foreign Minister during the absence abroad of Marcos Kyprianou.
During the meeting, he emphasised the need for regular scheduled flights to and from Beijing and Shanghai in order to improve trade and tourism relations.
