Cyprus & World News

Cyprus Airways “close” to finding investors, Stansted from September

27 June, 2014

Troubled national carrier Cyprus Airways is very close to finalising the framework that would allow foreign investors to take a strategic stake in the loss-making airline, while the European Commission ponders a rescue plan worth €103 mln.

The airline recently concluded a cooperation agreement with Qatar Airways, but this has not proceeded to include an alliance or outright takeover, while press reports also suggested that Abu Dhabi’s Etihad may be interested, but the Gulf carrier has already struck a deal with Alitalia this week.
The company’s chairman Tony Antoniou, himself in the limelight over alleged misuse of the cash-strapped airline’s funds, told the state-controlled Cyprus News Agency that “there is specific interest from potential investors that have signed confidentiality contracts with the company.”
“Any interest is being handled by the joint committee of the Minister of Finance, the Minister of Energy, the Accountant General and the chairman of the board,” Antoniou was quoted as saying.
The European Commission has initiated an in-depth investigation to verify whether government help for the restructuring of Cyprus Airways with €103 mln is in line with EU state aid rules.
Although it is not known when the Commission will decide on the issue, Antoniou said that it would be good to reach an agreement before the decision.
The airline is 93.7% owned by the government, after several cash injections and rights issues and 6.3% is held by local investors.
In December 2013, the Cyprus government notified the Commission of a €102.9 mln aid package to restructure Cyprus Airways, which includes a €31.3 mln capital injection granted in 2012, a conversion of debts into equity amounting to €63 mln and €8.6 mln to cover the deficit of the company’s staff pension fund, excluding pilots.
The Commission reportedly has doubts whether the restructuring plan is suitable to ensure Cyprus Airways’ long-term viability and whether the airline is capable of withstanding likely challenges in the air transport market during the next years.
The airline also announced that on September 14 it will start flights to London Stansted airport, after the sale of the company’s Heathrow airport slot for $31 mln to enhance its liquidity and ongoing cost-cutting plan that includes redundancies and sale of assets.