Cyprus state carrier, Cyprus Airways, posted a first-half net loss of CYP 23.32 mln compared to a loss of CYP 20.4 mln during the same period last year. According to the consolidated results of the 2006 first-half announced by the Cyprus Airways Group, the total revenue of the Group, reached CYP 86,8 mln for the first six months of 2006 in comparison to CYP 84,9 mln for the first six months of 2005, registering an increase of CYP 1,9 mln or 2,2% as a result of an increase in passenger revenue.
The Group’s operating expenditure, which includes cost of sales and administration expenses, was CYP 101,2 mln in the first six months of 2006 compared to CYP £108,4 mln in the first half of 2005, registering a reduction of CYP 7,2 mln or 6,6%.
Operating expenditure for the period appears lower because the 2005 comparative numbers include the operating expenditure of Hellas Jet of CYP 12,7 mln for which there is nothing in 2006. Excluding these expenses, the Group’s operating expenditure has increased mainly as a result of the rise in the cost of fuel which has added CYP 6,4 mln to Group expenses in the first half of 2006 compared to 2005.
The main reason for the increase in expenses in 2006 is that they include the redundancy compensation of CYP 10,2 mln, compared to CYP 2,9 mln for 2005, paid or to be paid to staff which has left or will leave the Company’s employment before the end of the year as part of the implementation of the Restructuring Plan. Excluding the said compensation Group staff costs, which are included under operating expenditure, are CYP 3,4 mln less in 2006 than in 2005.
The operating loss for the first six months of 2006 increased to CYP 24,6 mln from CYP 21,9 mln in the comparative period of 2005. The loss of 2005 was reduced by CYP 4,6 mln which was the profit realised on the sale of one aircraft and one spare engine.
Cyprus Airways Group said the results of the second half of each year, which incorporate the peak months in respect of passenger traffic, are under normal circumstances markedly improved in comparison to those of the first half. However the intense competition in the market place, the rise in the cost of fuel as well as the unstable situation in the Middle East make any predictions for the second half of this year difficult.
“It is important to note that the Group has proceeded to a large extent with the implementation of the Restrucuring Plan as submitted to the European Commission for the approval of restructuring aid. The implementation of the said plan aims at ensuring the long-term viability of the Group,” the announcement said.
It added that “because of the gradual implementation of the planned measures, 2006 will not enjoy the full benefit from cost reductions, something which will happen in 2007. In addition 2006 will be burdened with the redundancy cost of CYP 10,2 million which is a one-off expense. As a result despite the fact that during 2006 the foundations for revival of the Group have been set this will not be so evident in the full results of the current year as in those of the next one.”
In order to safeguard the cash-flow of the Group until the approval of restructuring aid is given, the Government guaranteed rescue aid loan has been extended until May 2007 after securing the necessary EU approval.
Cyprus Airways said the sale of Eurocypria to the Government for CYP 13,4 mln, which is expected to be completed before the end of the year, will further improve the Group’s liquidity.
“In view of the above the Board of Directors of the Company reasonably judges that the Group fulfills the necessary requisites to continue operating as a going concern,” the announcement concluded.
