Commission delays decision on Cyprus Airways loan

The European Commission has delayed for two weeks its decision on whether to give its approval to a crucial CYP 70 mln (EUR 120 mln) loan that Cyprus Airways (CAIR) is seeking from the Cyprus government. The decision was scheduled to be discussed on Wednesday, but there was a delay considering that four directorates have not yet forwarded their report to the EU’s Transport Commissioner.
The CYP 70 mln is a government-guaranteed loan, approved last year and is part of a ‘restructuring plan’ for CAIR, subject to the Commission’s approval. The gradual repayment of a previous CYP 55 mln (EUR 95 mln) loan to the airline, part of a drastic ‘rescue plan’, is a sine qua non.
In late 2006, CAIR sold Eurocypria to the government for CYP 13.4 mln (EUR 23 mln) in a move to ensure that Cyprus would have an airline even if CAIR was forced to terminate its operations. The Commission said it would look into whether the sale of Eurocypria amounted to an indirect subsidy. State subsidies are forbidden under EU law.
Although the two airlines are now separate legal entities following the sale, their administrative boards still have three common members. This has prompted moves towards a reshuffle.
CAIR chairman Lazaros Savvides, who wishes to vacate his seat and return to his office as Director General of the Ministry of Interior has said the boards will be reshuffled after all the crucial elements regarding the airlines’ future are known.