THE government said yesterday that ailing Cyprus Airways (CY) could raise fresh capital as it announced its decision to sell down its own stake in the state-controlled carrier.
Government spokesman Stefanos Stefanou said the amount of capital which will be raised was up to the board of the airline, in which the state holds a 69.5 per cent stake.
The remainder is owned by private investors.
Cabinet, the spokesman said, “approved participation of government as the main shareholder in new capital issue … and has also decided to authorise the finance minister (Kikis Kazamias) to negotiate the sale of government shares in Cyprus Airways.”
The government’s involvement in the capital increase must be approved by the commissioner for state aid.
Asked whether the decision concerned a majority stake, the spokesman said that was something the minister would negotiate with potential investors.
Last week, Kazamias did not rule out selling a majority stake to a private partner.
CY has gone through several overhauls in recent years, with attempts stymied by stiff competition from cheaper carriers on its most lucrative routes and rising fuel costs.
It posted a net loss of €29.3 million in the first half of 2011, its last reported results. Full-year results were due by the end of February.
Stefanou could not give a timeframe for when negotiations would start, but said the government wanted the issue resolved soon.
“The issue is pressing and the government’s intention is to move swiftly,” he said
The government last year gave CY a €20-million cash injection earmarked as compensation for damages incurred due to the Turkish ban on the airline using its airspace.
It followed agreement with staff on a rescue plan whose main provisions involved measures by the company to save €30 million and the workers contributing another €12 million – €7 million through pay cuts and the rest through shedding 140 jobs from a total of around 1,200.
Staff fear the company will suffer the fate of state-owned charter airline Eurocypria, which went bust late in 2010 – leaving around 300 people jobless – despite receiving €35 million from the state earlier in the year.
The airline inevitably became the latest point of conflict between ruling AKEL and main opposition DISY.
EDEK MP and former communications minister Nicos Nicolaides said it would not be an exaggeration if it was said that CY was staring bankruptcy in the face.
But Nicolaides also summed up the situation in the airline, exploited through the decades by respective governments and parties for their own ends.
He said “to date no one has been brought to account for the many catastrophic mistakes in such a defining sector for our country;s economy.”
Instead, the people are witnessing a blame game by parties who had and have serious responsibilities, Nicolaides said of ruling AKEL and main opposition DISY.
