Finance Minister Charilaos Stavrakis yesterday admitted there was little chance of finding measures that would ensure Cyprus Airways’ (CY) long-term viability, just temporary solutions that will demand continuous reinforcement to stop the state carrier from going bankrupt.
Stavrakis’ admission followed concerns voiced by MPs after the House Finance Committee held a closed meeting to discuss the govenrment’s CY recovery plan. The airline’s unions were also present.
The plan, which has been approved by all the CY unions and its board of directors, includes the submission of a €20 million supplementary budget as compensation for the losses suffered by Turkey’s ban on all Cypriot flights in the country’s airspace.
Stavrakis said these funds hoped to assist the airline’s efforts for recovery; however, he added that the state’s plan was just the start of many measures that need to be taken for CY to survive. Furthermore, he maintained that if the funds weren’t given as soon as possible, around 1,000 CY workers were in danger of losing their jobs.
“Dozens of airlines across the world are going bankrupt, so no one can be sure that these measures will fix all the problems long term,” Stavrakis told reporters after the meeting. “To ensure the company’s future is viable, this plan will need to be followed by more structural and strategic moves.”
The Turkish embargo, he added, created a serious distortion in CY’s competitive abilities, with the financial cost of fuel alone putting the airline at a serious disadvantage.
“If this money isn’t given, the company will suffer financially and around a thousand employees will lose their jobs,” said Stavrakis. “This will lead to some serious problems in the state’s economy and tourism as a whole.”
Committee Chairman, DIKO’s Nicolas Papadopoulos, said his party would decide whether to support the government’s €20 million request once the CY annual financial report is announced in the next few days.
“No one can deny that things are especially worrying,” said Papadopoulos. “Parliament’s concern is to see the airline continue its operations. We have given the board the chance to convince us that CY can be saved.”
He said the committee was offered “a realistic briefing, without over-ambitious forecasts” on the airline’s future prospects, as well as the consequences if it were to close down. “We would like to register our concern over what we heard today and we share the workers’ anxieties over the company’s future.”
Papadopoulos added: “We posed a series of questions, to which we expect answers before the supplementary budget for the €20 million is submitted. Our goal is to support CY to continue its operations, but we need to be sure that we won’t see a repetition of what happened with Eurocypria, where we gave €35 million to basically achieve a hole in the water.”
The Finance Ministry had infamously convinced parliament to release the €35 million in February last year, assuring MPs that the state’s charter airline, Eurocypria, had a viable future. The government had a lot of explaining to do when the airline eventually went bankrupt a few months later.
“Before the supplementary budget is submitted, we want to be given more facts and information on the future prospects of CY,” said Papadopoulos. “We want to support the airline, but we won’t release the funds if we are not sure its future is viable.”
DISY’s Maria Kyriacou called on the government – as CY’s major shareholder with great influence on its operations – to come up with a solution that will secure the airline’s future.
EVROKO’s Demetris Syllouris also called for efforts to find a long-term solution, while the Green Party’s George Perdikis said it was doubtful CY had future, even if the €20 million is approved.
Perdikis also underlined the possibility of the European Commission rejecting the government’s plan to reinforce CY, following its recent decision that member states can no longer fund state-owned companies.
“There are some hopes that CY can be saved, but for this to happen, all sides involved – government, parliament, CY and the airports’ handling company – need to show some patriotism,” said Perdikis.
