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Cyprus Airways closed down on Saturday after the troubled national carrier's last flight was operated from Athens to Larnaca on midnight Friday, ending decades of squandering public money and abusing EU aid.
Press comments and social media were mixed in their reaction on Saturday, with some saying it was a shame to close the island's nation's sole carrier, while the majority recalled the huge burden on taxpayers and anecdotes about poor management and bad attitude by staff, including an instance when pilots refused to return to their base in Larnaca and landed the aircraft in nearbby Paphos instead, simply because their shift was over.
The European Competition Commission ruled earlier on Friday that more than €100 mln in state aid afforded to the airline in recent years violated competition rules and that €66 mln of that money had to be returned to the taxpayer, an impossible task according to the debt-ridden company.
It rejected a restructuring and refinance request submitted in October 2013, as the airline had not made efforts to cut down on costs and turn it around, suggesting that Cyprus Airways could no longer be deemed viable without any state aid, an assistance it was not prepared to allow any further.
The government owns about 94% of the company stock that was about to be delisted from the Cyprus Stock Exchange next week for not filing financial reports since 2012.
This state control also spelled the company's demise as political interference almost ever since it was established 67 years ago resulted in poor management and inability by parliament to keep costs under control, with trade unions constantly demanding pay hikes and benefits, but no layoffs to pay for these rewards.
The present administration's efforts to seek new investors to take over Cyprus Airways and turn it around failed as no serious bidder came forward, fearing the state aid that would have to be paid back and the strong-arm tactics of staff and pilots' unions.
Greek carrier Aegean Airlines and low-cost giant Ryanair showed some interest, but only for parts of the business, basically in its non-EU routes and licenses to operate to the Middle East and Russia.
As a fall-back measure, the government bought the company's trade name and brand, depicting a flying moufflon, the protected wild goat of Cyprus, for €1.5 mln, while both Finance Minister Haris Georghiades and Transport Minister Marios Demetriades have suggested that a new airline could be created.
In any case, the impact on the island's aviation system is minimal as the troubled national carrier's market share had diminished over years to just about 10%.
As a result, some 4-5,000 passengers to London and Athens booked on all Cyprus Airways flights over the next few days, were being re-booked on other airlines, while a leading local travel agent, Top Kinisis, has undertaken the daunting task of re-issuing tickets, all at the government's expense.
The 550 staff will receive two month's pay as part of a deal struck with the government, while they will also be eligible to unemployment benefits for six months and the state has promised to reimburse their providfent and pension funds to the full. Unions have refused to allow serious cutbacks to the monthly poayroll of €2.5 mln, hampering further the airline's viability.
The EU rules specify that state aid cannot be afforded to any company if it has received funds within ten years. Cyprus Airways has received aid, grants and guarantees since 2007 when the previous Communist governmen refused to streamline the company and make it competitive.
In a desperate effort to keep the airline afloat, all its assets have been sold off in the past two years, including precious slots at London's Heathrow airport, directing business to the lower-fee Stansted airport.
Deputy government spokesman Victor Papadopoulos said on Saturday “plans have been made so that no employee will lose their benefits and at the same time that Cyprus will not be deprived of airline connections.”
“Unfortunately, this was a sad, unavoidable conclusion after what has happened at Cyprus Airways and over the years through successive governments, managements and other executives,” Papadopoulos said, adding that “it was unavoidable because others had, in 2012, given tens of millions in subsidies without the prior approval of the European Competition Commission, money which the EU is now demanding from the company to return to the taxpayer.”
He repeated the comments by the two competent ministers that “an effort is underway to recreate a Cyprus airline company, but one which will be of private interest.”
Passengers booked on Cyprus Airways flights should call Top Kinisis Travel Public on the local hotline 77787878 or +357 22869999 from overseas.
Meanwhile, Bank of Cyprus said that if tickets were purchased with the bank’s cards and the alternative arrangement with Top Kinisis are not satisfactory, they should follow the procedure described on the bank’s web page www.bankofcyprus.com.cy or call 1Bank at 800 00 800.
Furthermore, the bank said that its collaboration with Cyprus Airways regarding the “Sunmiles American Express” scheme is terminated immediately.
“The Bank has taken all necessary steps in order to ensure that the operation of all Sunmiles American Express cards will continue seamlessly by the Bank’s customers in their daily transactions. All Sunmiles American Express cards have been transferred to the «Cashback American Express» scheme, which offers cash back directly to the customer’s card account, from the first euro spent on all purchases anywhere in Cyprus,” it said in an announcement.
It added that “all merchants must continue accepting Sunmiles American Express cards, since as mentioned above; the Bank has taken all necessary steps in order to ensure that the operation of all Sunmiles American Express cards will continue seamlessly.”
