CYPRUS AIRWAYS (CY) unions yesterday threatened action if the state went ahead and pumped €35 million into the government-owned charter airline Eurocypria outside of an EU-approved framework.
The fall out between the two airlines was discussed yesterday at the House Finance Committee with CY chairman Kikis Lazarides saying the national carrier would be subjected to unfair competition and its future viability put in jeopardy if the government went ahead with plans to financially support Eurocypria.
Speaking on behalf of all five CY workers’ unions, the head of SYNYKA Andreas Pierides warned that workers were looking into the possibility of taking drastic measures, if their rights weren’t protected.
CY employees, he said, had made enough concessions already and weren’t prepared to bear the brunt of further losses.
“If the workers’ suggestions are not accepted and the government moves ahead with fragmented loaning to any airline company – outside the legal institutional framework – creating unfair competition of one company over the other and in extension, creating preconditions for selective approaches, then the workers and unions of Cyprus Airways will have no choice but to apply to the relevant Committee of the European Union and react immediately and dynamically, because such a development will be catastrophic for Cyprus’ air communications,” Pierides said.
He said CY was on the verge of bankruptcy between 2003 and 2006 with losses amassing to €150 million.
“The workers played a determining role in saving the company back then and in the frame of the Rescue Plan that was approved by the EU in 2006, workers made massive and painful concessions, which resulted in saving €12 million,” he pointed out.
In 2006, CY employees among others agreed to a 25 per cent staff reduction, which resulted in around 500 workers being fired. They also conceded pay cuts and timetable alterations. This resulted in profit for the airline in 2007 and 2008.
The five CY unions are calling on the state to re-determine the roles and strategies of both airlines, while guaranteeing the work positions and employees of both companies. They are also requesting an independent study into the future of Cyprus air communications. Eurocypria was a subsidiary of CY until 2006 when it was sold 100 per cent to the government in a manner that gave CY – itself a public-listed company majority owned by the state – a substantial cash injection.
Now the suggestion is that CY bosses want to see the smaller airline, whose running costs are around 30 per cent less than CY’s, shut down.
CY chairman Lazarides was however quick to rubbish the reports yesterday.
“The two companies are competitive and they should be. The issue is whether Cyprus, with its 800,000 residents, can handle two airlines by today’s standards,’ he said.
CY, said Lazarides, had managed to pick itself up and out of €150 million worth of debts in 2007 and rake in profits in 2008 – despite the international increase in oil prices and the start of the financial crisis.
However, the fact that CY was in competition with Eurocypria wasn’t helping the situation, he added.
Eurocypria Chairman Eleftherios Ioannou defended the charter airline’s viability, saying with the appropriate expert help from the outside, it could prove a vast contributor to the state’s economy.
Eurocypria, he added, would continue to concentrate on its low-cost charter flights and serve regional European airports.
“Eurocypria will also continue to make use of its fleet throughout the year, renting some of its planes to other countries during the winter and continuing its money-saving policies,” said Ioannou.
Merging with CY or closing Eurocypria down were not viable options, he said, as they would not resolve the main problem, which was the high cost of CY’s air fares. At the same time, Cyprus would lose a large part of tourism that is attracted by cheap flights.
The Committee’s deputy chairman Nicolas Papadopoulos, who yesterday presided over the discussion, said he was saddened that the two companies had come into conflict, especially considering today’s economic situation.
“What we need to hear is solutions and proposals. We need to hear about strategic planning that will take both companies out of this unfavourable financial situation, which we all know they are in.”
He added that the Committee would await answers to the questions posed by MPs during the session, from both CY and Eurocypria, and along with the government’s survey into how to deal with the problem it would reconvene to assess all the material before reaching final conclusions.
