Pilots resist pressure to call off strike
Travel agents telling people to rebook with BA
The fate of the 385 staff at Cyprus Airways who will be made redundant and the compensation packages to be paid depend on how soon the government can buy charter operator Eurocypria and inject some CYP 15 mln in much needed cash into the ailing national carrier.
The cost of the layoffs is estimated at CYP 20 mln, half of which will be put up by the government, the 69% majority shareholder of Cyprus Airways. So, the Group, that includes two Travel Value Shops at Larnaca and Paphos airports, as well as a booking service, must spin off wholly-owned Eurocypria, its only profitable operation.
The CYP 12.5 – 14.5 mln valuation made by auditors PricewaterhouseCoopers, is believed to be the sought-after price, but the Eurocypria board has asked for three more independent valuations to be sure and possibly get a higher valuation.
Aviation experts believe the price tag is overvalued as the charter company has no assets operating with a fleet of five leased Next Generation Boeing 737s, and relies on charter contracts that depend heavily on market forces and are hostage to fuel price swings.
“This is a fuel-sensitive business and Eurocypria achieved higher profits due to fuel price hedging. However, there are no guarantees this success will be repeated every year,” one expert said.
The Eurocypria board is expected to take its final decision in March and take it to the House for approval before parliament dissolves for elections on April 13.
All the money generated from the sale will be injected into Cyprus Airways, that is said to have liquidity problems as the banks have cut off its credit lines.
Presently, Cyprus Airways is as good as bankrupt, but the pending injection from the Eurocypria sale and the start of the high revenue generating season is expect to start soon, that could improve the company’s liquidity and keep it afloat until the September deadline given by the European Union to approve the state aid.
The airline’s chairman, Lazaros Savvides, and Transport Minister Haris Thrassou were in Brussels last month to convince the Commission of the viability of a rescue plan that includes a state-guaranteed CYP 60 mln in aid.
Officials in Brussels told the Cypriot delegation that the government could get Commission approval if it came up with 20% from “own contributions.” This corresponds to the figure the Eurocypria spin-off is expected to fetch.
CAIR pilots to strike on Thursday
Cyprus Airways pilots resisted pressure on Monday to call off their planned four-hour strike on Thursday, arguing that the government’s stance is “not good for the airline”.
CAIR Press Spokesman Tasos Angelis said that some of the Thursday flights have been diverted to Eurocypria aircraft “or will have some delay” until the strike is over.
“We are quite concerned with the militant stance of the pilots and their unions,” Angeli said.
Both the major trade unions SEK and PEO appealed to the Cyprus Airways pilots on Monday to suspend the strike measures.
According to a SEK announcement, the two unions “believe that any strike measures are not helpful in this critical period”.
After many weeks of negotiations at the end of last year the government thought it had a deal with the unions that would allow it under EU rules to subsidise the airline.
Cyprus Airways was expected to propose a list of names this week of those who will take redundancy.
However, the highly paid pilots, who are rumoured to be looking to buy the airline on the cheap, appear to be scuppering the deal.
An airline official said that the government is expected to “get tough” after the parliamentary elections, and once the Eurocypria spin-off and cash injection has gone ahead.
Meanwhile, British tourists who have booked flights on Cyprus Airways as far as eight weeks away are being called up and told to rebook with British Airways, the Financial Mirror has learned.
