Cyprus Airways (CAIR) will submit a rescue plan to the EU on Thursday in order to safeguard the future of the airline, at a time when the major staff unions have opposed the restructuring plan.
The Council of Ministers decided Wednesday to submit the revised plan that includes harsher cutbacks, with further cuts in pay, staff cuts, management cuts and reduction in administration and operating costs for the majority government owned company.
The group has three main divisions — the troubled Cyprus Airways, the break-even Duty Free Value Shops and the profit-making Eurocypria charter subsidiary.
“The government will go on its own and submit the plan without union approval,” Government Spokesman Kypros Chrysostomides told a press briefing.
“We were faced with three choices — not submitting a restructuring plan, closing the airline, or submitting a revised plan. We went for the third option,” Chrysostomides was quoted as saying.
“If this revised plan is approved, then it will allow the company to continue its operations and become viable,” he said.
The spokesman added that the government is also working on a contingency plan in case the rescue plan is not approved by the EU and the airline’s closure is deemed unavoidable.
The pilots union, PASIPY, and the biggest union, SYNIKA, refuse to back the plan and are joined by the other three unions, claiming that the plan was drafted without their involvement and that it is doomed to fail, like the other plans before it.
The board and management of the troubled airline on the other hand need to submit the plan to Brussels by the November 3 deadline in order to receive permission to borrow CYP 58 mln, which will be used to repay a CYP 30 mln maturing loan and cover CYP 10 mln cost of redundancies and CYP 18 mln needed to complete the restructuring plan.
The rescue plan drafted by CAIR Deputy Chairman Frixos Savvides envisages the forced redundancy of 343 staff, 8% pay cut for pilots and managers, 5% pay cuts for all other staff, reductions in other benefits including the airline’s provident fund, as well as more outsourcing of services, hoping to save at least CYP 20 mln in annual costs.
The architects of the plan are hoping that if they win approval from Brussels and the government, then they will be able to win concessions from the unions, despite the fact that staff have said they will ignore it.
The pilots, who had previously submitted their own rescue plan, say that the current plan is doomed to fail, since it does not address the core issues confronting the airline and instead is filled with half measures, with employees told they are to blame for the past mistakes of management and previous boards.
“It’s the government’s responsibility to submit the plan. As far as we are concerned, our job was to deliver the plan to the government and they can make any changes they wish, and decide to submit to the EU,” Savvides said.
