The plenary of the Cypriot House of Representatives has approved a capital increase plan of 35 mln euros, to save the state-owned chartered flight carrier.
The plan was approved on Thursday after a long debate with a 26-13 majority and namely with the votes of ruling AKEL party, DIKO, EDEK, while opposition DISY and EVROKO parties voted against.
The plenary also voted against an amendment suggesting that the plan should be reduced to 10 million euro which would cover only the immediate financial needs and the current expenditure of the carrier.
The report accompanying the bill noted that the government approved the increase of Eurocypria's share capital given the fact that the firm faced from 2007 serious financial difficulties, which negatively affected its economic situation.
It also said that the steep rise of the oil prices observed in 2008 and the international financial crisis resulted in an accumulated loss of 35 mln euro in the past three years as well as losses of 3.3 mln euro and 13.8 mln euro in 2007 and 2008 respectively.
Furthermore the carrier estimates that the firm’s financial losses in 2009 reached 18 million euro.
The Parliament has also been informed that the firm has concluded short-term loans with Cypriot banks worth of 28 million euro to cover its current financial needs, but these loans were to be granted on the condition that that government would proceed with the increase of Eurocypria's capital.
The Cypriot Finance Ministry informed the parliament that in the framework of its policy to support tourism, employment and the economy in general, the decision for Eurocypria capital increase by 35 mln euro was deemed necessary, regardless of a possible decision regarding the role of the state as a shareholder in Cyprus' two state-owned air carriers (along with Cyprus Airways) or the interest shown by a foreign investor to participate in Eurocypria's share capital.
For 2010 Eurocypria has already sold 2.052 flights while another 796 flights are expected to be reserved. The carrier is expected to reduce its losses to one or two mln euro for 2010, while with the implementation of an action plan, the Carrier is expected to recover by 2011.
