THERE were fresh calls yesterday for Cyprus’ two airlines to merge, as the largest – Cyprus Airways (CY) – posted €25.5 million in losses for the first half of the year.
This was a stark contrast to the €3.5 million in losses recorded by the company during the same period last year.
The two big parties, ruling AKEL and opposition DISY appear to agree that majority state-owned CY and 100 per cent state-owned Eurocypria should merge, but disagree on the manner of the deal if it were to go ahead.
DISY deputy chairman Averof Neophytou said merging two financially bankrupt organisations was not a solution as this would just cause new problems.
“The first move is the merger of the two companies and at the same time to find a private investor. It is not the state’s job to manage airlines,” Neophytou said.
AKEL spokesman Stavros Evagorou said his party did not agree with the state relinquishing control of CY, the national carrier.
“If DISY’s proposal is for the control of CY to leave state hands, surely we disagree,” Evagorou said.
He said it has already been decided that a “controlled” merger would go ahead – thus saving some €12 million per year.
“The government needs to move swiftly towards a controlled merge of CY and Eurocypria under a specific umbrella. From then on I think what is needed is a new, more radical restructuring plan,” Evagorou said.
CY’s biggest union, CYNIKA, agrees with a merger but is against the state giving up its majority stake in CY.
“We urge the government to expedite the merger; it is the only way,” CYNIKA representative Andreas Pierides said. Pierides blamed the airline’s woes on “unfair competition.”
For one, he said, CY could not fly over Turkish airspace as other airlines do, due to an embargo Ankara has imposed on Cypriot air and sea traffic.
And “The Cyprus Tourism Organisation cannot bankroll foreign low-cost companies to compete with CY and Eurocypria,” he said, referring to the recent deal struck with low-cost carrier Ryanair, which will begin operations from the island in November. CTO has taken on the promotion of the airline as part of the package.
Pierides also accused airport operator Hermes of striking deals with Ryanair and other companies, which put CY viability in jeopardy. He was referring to Ryanair’s deal with Hermes who negotiated on airport charges in return for a pledge to bring in a certain number of tourists to Cyprus each year as part of the agreement.
Pierides said the union would ask to see the trade and industry minister about Hermes’ charges in relation to such companies “because CY cannot be the main user of the airports and pay Hermes handsomely” and they in turn give away large amounts to private companies.
“It is a scandal. It is unfair competition,” Pierides said. “We need to protect the national carrier.”
His charges were disputed by Hermes, who said the same incentive scheme extended to Ryanair was open to all airlines, including CY.
“The first airline Hermes applied to, asking them to benefit from this plan was CY,” Hermes spokesman Adamos Aspris said. “Unfortunately the reply was negative.”
Aspris said the aim of the scheme was to increase tourist traffic to Cyprus by encouraging the creation of new routes to and from the island.
He said other airlines had also shown an interest in the scheme “and soon we believe we will be in a position to announce new routes by new companies.”
