Ailing state-owned charter airline Eurocypria appears to have been thrown a lifeline by a foreign investor – said to be a major player in the tourism sector – it emerged yesterday.
According to a statement by the Finance Ministry, Eurocypria’s board of directors met Finance Minister Charilaos Stavrakis yesterday to inform him that a major tourism sector player was seriously interested in investing in the airline, whose biggest client last year was UK tour operator Olympic Holidays.
Eurocypria was sold by national carrier Cyprus Airways (CY) to the government in June 2006 for around CY£13.4 million (€22.9 million), mainly to provide a cash injection to CY. Since then, the airline has been experiencing a number of difficulties, mainly financial.
Although profitable at the time of the sale, the airline declared a €2.5 million loss in 2007 and a €10 million loss in 2008. Reports suggest a 2009 loss of a further €10 million, and in July Eurocypria was said to be carrying accumulated losses of some €20 million as well as €22 million debt.
Responding to reports in August last year that the government was considering injecting €35 million in share capital into Eurocypria, CY Chairman Kikis Lazarides called on the government to shut it down or merge it into CY, arguing that a study had proved that both airlines would fold if they continued competing for business. The state owns 70 per cent of CY and 100 per cent of Eurocypria.
In September, Eurocypria CEO Lefteris Ioannou announced that a study by international experts had concluded that the ailing airline could be commercially viable, provided it was restructured and its operations reorganised. A restructuring plan was prepared on the basis of the study and passed to the government.
The public and increasingly bitter row between the two airlines continued over the following months, with the Finance Minister having to intervene as peacemaker – while at the same time refusing to close down Eurocypria.
According to yesterday’s Finance Ministry statement, Stavrakis now intends to table specific proposals to the Council of Ministers once he has studied the new developments in depth.
It seems likely that a deal has already been struck with the mystery investor.
Late yesterday afternoon, Eurocypria invited the media to attend a press conference at noon on Wednesday, January 20, during which Ioannou “will talk about the present and future of the company in relation with what it has to offer to Cyprus’s tourism sector”.
