By Jean Christou
CYPRUS Airways pilots have offered to buy the 12 per cent stake in the airline which the government must sell by September under stock exchange regulations.
The government, which must reduce its stake from 82 to 70 per cent, has so far been unable to offload the extra shares, but the pilots have now come forward with a feasibility study outlining their own deal.
Pilots’ union president Chris Christodoulou said yesterday the deal would involve around 100 Cyprus Airways pilots purchasing the 12 per cent stake – more than five million shares – at a cost of around £2.5 million.
The airline’s 2,000 staff have already been offered a 22 per cent share deal by the company in return for cost-cutting concessions which would save CY £5 million a year.
The cost-cutting proposals are directly aimed at reducing the annual £40 million wage bill which constitutes 35 per cent of CY’s running costs.
The unions have so far been unenthusiastic and have not yet given an answer to management.
From the pilots’ point of view this is not enough, Christodoulou said, because it would only give the pilots a one per cent stake. “We want to have a good controlling share in the company,” he said. “In order to survive the company has to have the participation of the employees.”
He said the feasibility study by Pricewaterhouse Coopers, completed just days ago, has concluded the proposal would be a very positive move for CY.
But before the results are released the union will have a meeting with Finance Minister Takis Clerides, Christodoulou said.
“The government wants to sell – they have to sell,” he said.
An attempt by the government in January to offload the shares failed miserably to attract investors.
Stockbrokers blamed the lack of interest on the fact that staff were in the middle of a strike at the time. This scared off potential, investors although several said the airline had so many internal problems that they would not have been interested anyway.
Christodoulou said that ideally the pilots would like to buy a 25 per cent share in the airline. The £5 million needed would not be a problem because the 100 or so union members have some £10 million in their pension fund.
“Pilots could also agree to each give £30,000 of their own money,” Christodoulou said. “We believe in the company. We believe it has a future and we believe we can turn it into a profitable airline. The way forward is for the employees to participate.”
The Cyprus Airways Group announced a profit of £5 million for 1998 after two years of losses. But profits were only made possible by its subsidiaries, the charter firm Eurocypria and Duty Free Shops Ltd.
The group also expects to make a profit this year, but unless the airline manages to cut costs and unprofitable routes, it is unlikely to remain competitive in the face of European air liberalisation.
