CYPRUS Airways (CY) said yesterday it broke even in 2010, lifted by a state bailout given to the cash-strapped national carrier because of a ban in flying over Turkey.
CY, which is majority controlled by the state, reported a €215,000 net profit for 2010 after a €3.28 million loss in 2009. The results were indicative, the airline said.
Parliament last week approved €20 million in aid to the airline. It met a long-standing demand of the company, which says it is saddled with higher costs compared to its main competitors because of a Turkish flight ban.
CY reported €18.7 million as “other income”, representing compensation from the state for a ban from flying over Turkey from 2004 to 2009, and the sale of an aircraft.
Its board had initially planned to meet to approve results on February 25, a week before parliament approved the cash. Instead the announcement is being made today, a week after parliament gave the nod for the money.
The airline reported losses of some €25 million in the first half of the year and had spoken of totol; possible 2010 losses of €30 million. That was prior to the cash injection.
For the year, CY’s income fell 4.5 per cent while the cost of jet fuel rose 25 per cent, the airline said.
The finance minister had on February 21 said the carrier could go bust without the aid. Airline staff recently agreed to pay cuts and a number are being made redundant under a scheme to save about €30 million in annual costs.
According to CY prospects for this year will again be subject to the global financial crisis, instability in the energy sector, constant currency fluctuations – in particular those of the US dollar and the euro – and the increase in unemployment and labour insecurity, mainly in Europe.
“All these factors have a direct impact on the Company which is closely monitoring the situation and works out plans in order to be able to respond to emerging developments,” it said in a statement.
CY said in order to secure its long term viability an action plan has been prepared. In this respect both the Board of Directors of Cyprus Airways and the trade unions have accepted the mediation proposal of the minister of labour for employee concessions for 2011 and a compensation scheme for redundant staff.
“The renewal of the airline’s collective agreements as from 2012 is also expected to contribute towards the reduction of the company’s operating costs,” CY said.
“The fulfilment of the company’s just claim against the government for the payment of compensation for the continuing prohibition of its flights over Turkish airspace contributed towards correcting to some extent the existing distortions to healthy competition and improving the Company’s liquidity in such a way as to meet its obligations as they fall due,” it added.
It also said that significant adjustments have been made in the company’s flight schedule so that it is
streamlined and loss making routes are limited.
Also the renewal of the A320 fleet which is in its final stages, in the context of which as
already announced on 3 March 2011 the Company has sold one A320 aircraft for US$6
million at a profit of €1,6 million, as well as the decision for the sub-leasing of one of the
two A330 aircraft, “are expected to yield significant financial benefits for the company
both in terms of profitability and liquidity”.
