TIME SEEMS to be running out for the national carrier. The European Commission, in the next month or two, is expected to make a decision about the state funds Cyprus Airways received in the 2011 and the likelihood is that it will ask the company to return the €113million it was given to stay afloat. It does not have this kind of money to return and the only option would be closure, as the finance minister pointed out on Thursday.
Aware of this danger, staff unions have been protesting, accusing the board of incompetence and the government of not doing anything to protect the company. Their audacity, in particular that of the pilots union PASYPI – the most vociferous critic of the government and board – the members of which took the airline to court because it had cut their salaries, is quite astonishing. The pilots won the case and the company now has to find a few millions it does not have to pay the amounts cut, plus interest.
Apart from the government, the unions also attacked the “amateurism of the party hacks appointed to manage or be part of the company board.” They had never complained in past years about the ‘party hacks’ because they were satisfying the most unreasonable pay demands made by the unions. It is thanks to the board’s control by the parties that Cyprus Airways staff enjoyed pay and benefits that were not paid by much bigger and much more profitable airlines. But a company cannot live beyond its means indefinitely, being bailed out every few years by the taxpayer.
Cyprus is now a member of the EU and state subsidies are prohibited. Apart from the €16.6m it received in 2007 with Commission approval, from 2011 to 2014 the taxpayer pumped in €113m without the Commission’s approval; the government is also the guarantor of loans totalling €78m. All this money was used to cover the losses of the company, which would have been closed down a long time ago if it had not been owned by the state.
In the last few months, false hopes had been raised that a strategic investor would be found to take over the company, especially after the government invited companies to submit expressions of interest. Now, the unions are claiming that government has not handled the matter properly, as the objective of the two companies that were asked to submit plans – Ryanair and Aegean – was to use the brand name and exploit bilateral air agreements between Cyprus and other states.
But what did the unions and the parties supporting them expect? That an investor would come and pour money into an insolvent company, with no assets, that could be ordered by the EU to repay in excess of €100m to the state? And all staff would keep their jobs and the big wages they are earning so the company could carry on making losses? In reality, the unions are not looking for a strategic investor but a fairy godmother to come and fix everything and make all their wishes come true.
Cyprus Airways is beyond saving because it has been the victim of the unrestrained greed of unions, the self-serving agendas of the party hacks on its board and the interference of governments for decades. The company was being plundered and mismanaged but nobody ever complained because until 2004 it was protected and returning profits. Its surplus in 2003 was €110m and it had no debts. Like the other state monopolies – Cyta, EAC, Ports Authority – it followed the popular state business model of over-charging customers for a lousy service and paying its numerous and underworked staff unheard of wages and benefits.
For the last 10 years, since we joined the EU, there has been no protection and the company has recorded losses and piled up debt, having been forced to sell all its assets. No investor, strategic or otherwise, would want to take over the company even if it was given for free. And this is not because the Anastasiades government has been reluctant to save it as the unions are claiming. It is because it has been run into the ground over the years by its greedy unions, its poor management, self-serving politicians and irresponsible governments all together ensuring that, eventually, there would be nothing left to save. That time, unfortunately, has arrived.
