Poland’s leading tour operator, Itaka, has expressed interest to take a minority stake in government-owned Eurocypria, with an option to buy a larger share of the charter operator in the future, sources close to the bid have told the Financial Mirror.
Itaka, Eurocypria’s main travel partner in Poland, is keen to have a say in a carrier in order to develop packages of its own for Polish tourists to destinations beyond Cyprus and Greece, while it would also need to operate some aircraft out of Warsaw airport.
The tour operator, that recently overtook rivals Triada and Polish TUI, carried 286,000 holidaymakers last year, up from 228,000 in 2008, increasing its revenue by about PLN 200 mln (50 mln euros) to nearly PLN 600 mln (149 mln euros) despite the sector recording a 10% fall, with the Polish outgoing travel market estimated at 745 mln euros.
Details of the bid are expected to be revealed during a press conference on Thursday, when Eurocypria chairman Lefteris Ioannou is also expected to lash back at attacked from Cyprus Airways management and unions, who have been demanding that the charter airline be shut down in order to safeguard the troubled national carrier’s survival.
With nearly a third of its business now carrying holidaymakers from other European destinations to Greece, airline industry analysts told the Financial Mirror that such a deal would be the best solution for the company, as it would not be obliged to merge its operations back with CAIR which would raise costs and make Eurocypria uncompetitive.
With the Akel-controlled board agreeing in principle to the deal, a comprehensive bid is expected to be tabled to the Council of Ministers that is also seen as supportive as it would increase revenue for the state and still maintain a majority stake or golden share in the airline. It is not yet known how the trade unions of the 250 or so employees will react, but relations between the crews of the two state-controlled carriers have not been cordial.
CAIR study is “biased”
In an announcement on January 8, Eurocypria lashed back at CAIR’s claims that the first should be closed, saying that charter airlines carry 46% of all tourist traffic to Cyprus and that Eurocypria has already pre-sold seats on the majority of its flights for the summer of 2010.
The Eurocypria announcement said that it would closely review a study submitted by Rigas Doganis and Associates on the viability of the two airlines, adding that Doganis has been a Cyprus Airways consultant for many years and that Eurocypria was never approached when the survey was being conducted.
The Doganis report suggested that the charter carrier would no longer be viable as an operator to Cyprus. The report failed to indicate, however, whether Eurocypria could survive if it used a secondary or more hubs to serve other destinations, as it does at present out of Greece.
Chairman Ioannou submitted a new plan to the government last year that foresaw a restructuring of its operations, as well as its network.
Eurocypria, whose biggest client last year was UK tour operator Olympic Holidays, was spun off from Cyprus Airways in June 2006 and sold back to the government for 22.9 mln euros, with the funds injected back into CAIR that is no longer eligible for state aid.
In its ten years of operation, Eurocypria has often reported annual profits of about a million euros, but in the past two years these turned to losses of nearly 10 mln.
