The government aims to raise the share capital of state-owned carrier Cyprus Airways, said here Wednesday Government Spokesman Stephanos Stephanou after a Cabinet meeting.
''In the context of government policy to support Cyprus Airways, given its role especially for the Cypriot economy, the Cabinet reaffirmed today its decision of January 2011 to raise the share capital of the company and approved the participation of the government as the major shareholder in the new issue of capital of the company,'' he said.
He added that the Minister of Finance was authorized to take all necessary steps to implement that decision and to negotiate the sale of the government’s majority stake in the company and develop a proposal that will come before the body for approval.
''The Minister of Finance and the government will move towards negotiating with a strategic investor with regard to Cyprus Airways to secure the company's future operations,'' he added.
Stephanou said that Cyprus Airways has been facing several problems for years which became more pressing by decisions taken in the past but also with the accession of Cyprus to the EU and the liberalization of air transport.
He added that strong competition made the problems worse and they became even more pressing with the global economic recession.
On January 20, 2011 the government approved the increase of the share capital of the company and 20 million euro to compensate the airline for extra costs due to restrictions imposed by Turkey on CYAir over flights in Turkish airspace.
Turkey, whose troops occupy Cyprus’ northern areas since they invaded in 1974, does not recognise the Republic of Cyprus and does not allow Cypriot aircraft to fly in its air space.
Replying to a question, Stephanou said that the amount of capital raised would be decided by the Board of Directors of the airline.
He also said that he could not give a timeframe for completing the negotiations, but said that these issues are pressing and the government's intention is to move swiftly.
Asked about a possible investor, Stephanou said that the company has made some preliminary contacts and that they wait to see whether existing interest will be translated into concrete proposals.