CY chief defends Heathrow sale

By Elias Hazou
Cyprus Airways (CY) chairman Tony Antoniou on Tuesday defended the sale of the airline’s last time-slot at Heathrow, dismissing dissenters’ claims that the move will prove to be the airline’s undoing in the long run.
The airline’s pilots union PASYPI, angered over the sale, demanded to meet the minister of communications to explain why it was a bad move.
In a statement, the union said that judging by the minister’s public comments on the subject he appears to be “poorly informed, perhaps even misinformed”.
PASYPI, which described the sale as a “crucial error,” wants the government to weigh in so that CY instead implements a previous restructuring plan drafted by Air France Consulting, providing for across-the-board cuts which they say would not necessitate stripping the airline of valuable assets such as the slot at Heathrow.
CY announced a deal to sell its remaining slot at Heathrow to American Airlines for US$31m (€22.9m) on Monday.
The carrier said it would nevertheless continue flying to London, to Stansted. The Larnaca to Stansted route will open from September 14.
The airline said moreover the sale generates a revenue stream that would see the ailing company through to 2015, arguing that the Heathrow slot was operating at a loss.
PASYPI head Petros Souppouris voiced concern that the cash from the slot would be wasted away.
He went on to wonder how CY would be able to compete with low-cost airlines flying to Stansted. Another PASYPI rep meanwhile deplored the fact that CY might have to cut corners on safety and quality of service.
Souppouris asked why the last slot went for €22.9m, compared to the previous one that was sold for around €6.5m – hinting that something suspicious was afoot and that parliament should look into it.
The pilots also asked how an investor would be interested in CY once the airline had dumped all its valuable assets one by one.
CY boss Antoniou countered that the current management has been keeping the company afloat over the last 14 months “without a single cent in state aid.”
He said the slot sold off to Middle East Airlines in March was a night-time slot. Night-time slots go for less than day-time slots, he explained.
Flying to Stansted would help slash costs, since the airline would no longer need to lease slots at Heathrow, the savings passed onto passengers via cheaper tickets, he added.
Another benefit for CY is the lower airport taxes offered by Hermes Airports, operators of the two airports in Cyprus, to airlines flying to and from Stansted.
Antoniou also denied that the cash from the sale would be sucked into a “black hole,” as the pilots have warned. The money would be placed in closed accounts, to be accessed only in 2015, he added.
Speaking to the Mail on condition of anonymity, a CY pilot said it made no sense to discard the Heathrow slot, which accounted for as much as 25 per cent of the airline’s revenues.
But he conceded the point that the planes are never full on the Larnaca to Heathrow route, and that therefore there was a case to make for the slot not being profitable.
However, the source pointed out that the pilots at least have seen no paperwork – such as a cost analysis – proving that the route is loss-making.
“If it’s losing money, instead of getting rid of it at the drop of a hat, you should seek ways of returning it to profit,” he said.
The same source suggested CY boss Antoniou was being disingenuous when claiming that the sale of all slots at Heathrow is stipulated in the restructuring plan submitted to the European Commission.
The plan, he said, is somewhat vague on this point, in that it does not specify that all slots are to be sold.
What’s more, the restructuring plan submitted to the European Commission was compiled not by aviation experts, but by CY’s own auditors, KPMG.
The Commission has opened an in-depth investigation to verify whether Cyprus’ plans to support the restructuring of the airline with €102 million are in line with EU state aid rules. In particular the Commission is probing whether the restructuring plan is suitable to make CY viable without continued state support and to offset the competition distortions created by the state aid.
The Commission is expected to deliver its decision sometime in the fourth quarter of the year.
Should it rule that CY must return the state aid it received in the past, the company would most likely face closure, communications minister Marios Demetriades reiterated on Tuesday.
Asked by reporters whether there are any thoughts on divesting CY from additional assets, the minister said there are no more assets for sale.
“The company’s assets are its name and clientele,” Demetriades said.
Following drastic downsizing, CY’s fleet currently consists of six aircraft, five of which are leased.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.