THE NORTH’S Cyprus Turkish Airlines (KTHY), faces possible bankruptcy after the company that maintains its aircraft sent in bailiffs to seize US$12 million worth of outstanding debts.
The move came on Monday, when Turkish Technics, a Turkish-based maintenance company linked to the Turkish national carrier Turkish Airlines (THY), called in a long-standing debt, affectively freezing KTHY’s assets.
“Bankruptcy has not been declared yet, but it remains likely,” a source close to the troubled airline’s management told the Cyprus Mail yesterday. The carrier’s director Selim Altincik is currently in Turkey holding emergency talks aimed at averting the total collapse of KTHY.
According to sources, KTHY’s debts are not limited to those owed to Turkish Technics, and in fact total $120 million. The Cyprus Mail was also told that the airline was currently losing around $3.5 million a month.
KTHY, which current has six planes in its fleet, has been plagued with problems since it was established in 1974. Recently, it was hit by a series of strikes at the north’s main airport Ercan when the airline tried to lay off 137 employees. All were eventually reinstated, although none of the 670 staff at the airline have been paid since March.
Whether the airline can be saved will, according to sources, be revealed early next week.
“There are meetings going on now, and over the weekend. But by Monday there should have been a decision on what course of action will be taken,” a source said.
Possible alternatives were “a dramatic reduction in the number of staff” working at the airline or “a possible buyout”. Several private investors had shown interest, the paper was told.
Currently, half of KTHY’s assets are owned by the ‘state’, while the other half belong to a company named ADA Ltd.
Those involved in the north’s struggling tourist industry have long criticised KTHY for failing to provide adequate transport for tourists wishing to visit the island.
“It has been a thorn in our side for 25 years,” one Kyrenia hotel owner, who wished to remain anonymous, told the Mail yesterday. He added: “It has been run as patronage for a certain class of people and is massively overstaffed. It could run with a third of the number of people working there now”.
The hotel owner said too that he doubted whether there were really businesspeople interested in buying KTHY.
“No one would want to buy that, with those kind of debts,” he said, adding that the management of KTHY was likely in Turkey in an attempt to get a bail out from the Turkish government.
Head of the Turkish Cypriot Travel Agents Association in London, Akin Koc, warned in the press yesterday that customers had begun cancelling summer holidays in north Cyprus this summer, fearing that the airline would collapse and fail to refund them.
“With 90 per cent of the bookings in, this could not have come at a worse time,” he said. Koc, too, said he did not believe private investment in the airline could resolve the debt issue.
“This airline needs to be controlled by the state for the benefit for the industry. The private sector does not have the power to do that,” he said.
Responding to Koc’s warnings, KTHY said yesterday all its flights were still running and that it was confident current problems would be resolved.
“KTHY is not going to disappear. There are enough alternatives for us to consider, and one of them will be the right one,” the airline’s public relations department told the Mail.
