4 new Airbus for Cyprus Airways, but costs keep on rising

Cyprus Airways (CAIR) is set to partially refresh its fleet of 11 Airbus with four new aircraft to replace four of its oldest. It is taking delivery of Airbus A319 and A320s through lease agreements with CIT Aerospace International of Ireland.
Of the older A320s, one is set for delivery to new buyers this month and two in January, with new replacements arriving in Cyprus next January, February and May.
Earlier this year, the state-controlled company agreed to sell three of its aircraft at USD 5.6 mln each, returning a profit of EUR 4.5 mln. The buyers are expected to dismantle the aircraft and use them for spare parts.
However, two of the airline’s biggest costs hampering its growth and return to profitability are the fuel surcharges and the new airport usage fees imposed by Hermes Airports, operator of the new terminal in Larnaca, that have reportedly risen by 47% since 2006.
The International Air Carrier Association (IACA) said last week that the celebrations for the opening of the new Larnaca airport were premature because “the cost of the new airport, which is being passed through to the airlines, and the increased cost of service provision combined together are unaffordable for many of the carriers, in the current harsh economic climate.”
Luc Geens, IACA’s Manager of Operations, said that Larnaca has become “one of the most expensive airports in Europe to fly to,” adding that the government should extend its help to the airlines with the reduction in landing charges for at least a year more.
In May, the government announced a reduction on aircraft landing and parking fees at Larnaca and Paphos airports by 25% as well as a grant of four euros per passenger carried to Cyprus by all airlines.
Cyprus Airways spokesman Kyriakos Kyriakou was quoted by the local press as saying that the national carrier is burdened with the highest airport landing and parking fees of EUR 4 mln a year.
Responding to a parliamentary question earlier this year, CAIR also admitted that it made a loss of EUR 11 mln last year that was carried forward to 2009, as fuel surcharges rose to EUR 29 mln but the company only earned 18 mln from the surcharge imposed on air fares.
CAIR announced after-tax losses of 3.5 mln euros in the half-year period to the end of June this year, an improvement over the 7.2 mln euros in losses in the first half of 2008. For the whole of 2008 it recorded a profit of 1.74 mln.