— New joint chairman “in a few days” —
The government is going ahead with plans to merge the island’s two ailing airlines, state-controlled Cyprus Airways and state-owned charter operator Eurocypria, with a new joint chairman expected to be appointed within the next few days.
Bank of Cyprus Group Senior General Manager Vassos Shiarli has been tipped for the job, but the government and the bank have not made any statements to confirm or deny the report.
Finance Minister Charilaos Stavrakis told Eurocypria union reps on Tuesday that the new joint chairman will also undertake to restructure both airlines into a new entity to prevent both of them from collapse and ensure that the new company will be financially viable and competitive.
Talk of a potential merger, driven in the past by CAIR management and union leaders, who had also called for ECA to be shut down in order to save their own jobs, reached a fresh climax last month when the troubled national carrier announced losses of EUR 25.5 mln for the first half of the year, with a further deterioration of profits expected for the rest of the year.
This prompted the Finance Ministry to suggest that Eurocypria should not renew the lease on one of its aircraft next year, prompting the charter operator’s management and staff to accuse the government of asset-stripping the company in order to secure CAIR’s survival.
ECA union leaders said they got reassurances from the minister that all staff would transfer to the new company. However, one of the ideas on the table is to proceed with yet another round of early retirement schemes to be offered to staff from both airlines, according to a proposal by KPMG.
Elisseos Michail, general secretary of the OIYK-SEK trade union said after the meeting with Stavrakis that the new joint chairman would enter into a dialogue with them and produce a restructuring plan which would then be submitted to the European Commission for approval.
“Only then will we be able to talk about a new airline entity in Cyprus,” he said, adding that job security would be negotiated with the new joint chairman and not with the government.
The spokesman for the SIDIKEK-PEO trade union said that they asked the minister to ensure that all staff would be transferred to the entity with their existing terms and benefits, even though ECA staff are paid significantly less than their colleagues at CAIR.
€35 MLN "SCANDAL"
Opposition Disy deputy leader Averof Neophytou raised the stakes once again in his criticism of the government’s handling of the whole issue saying that those responsible for granting a 35-mln-euro lifeline to Eurocypria should be called to give public explanations.
Neophytou said that the government committed itself to guaranteeing the new loan six months ago because it argued that any merger of the two airlines was impossible and that the fresh cash injection would ensure the charter operator’s viability and return to profitability, while also securing all the jobs at Eurocypria.
“Six months later, the Minister of Finance and the government spokesman now tell us that Cyprus can no longer afford two airlines,” he said.
“The government is demanding from the staff to make sacrifices and prepare for job losses and early retirement. Somebody should be responsible for this scandal,” Neophytou added.
He suggested that one solution would be to give the management and majority shareholding in the company to those who have aviation expertise and asked what German and U.K. citizens have been deprived of ever since Lufthansa and Britiosh Airways ceased to be state-owned carriers.
Evroko party press spokesman said that some people purposely misled the House of Representatives and contributed to the squandering of public funds. He added that the boards of both airline companies should urgently review the experts’ proposal and enter into a dialogue for the benefit of both companies, the state and taxpayers.
The Employers and Industrialists Federation, OEV, had earlier stated that “the merger of both companies must be implemented immediately and a new company be established based on completely different foundations from what both are today, in order to survive. Now is the time for bold decisions.”
“The island’s economy and the tourism sector in particular need to see a smooth operation of air transport industry and the current situation does not help,” OEV concluded.
On Monday, SEK general secretary Nicos Moiseos told reporters after a meeting with Stavrakis that “labour cost is one parameter, without meaning that the solution would be to cut wages and benefits or dismiss staff.”
Stavrakis has kept plans close to his chest but warned last week that both companies risked shutting down if the merger did not go ahead as soon as possible.
