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Stavrakis: we’ll be left without an airline unless merger goes ahead
Finance Minister Charilaos Stavrakis entering CY's head offices yesterday FINANCE Minister Charilaos Stavrakis warned yesterday that the island risked being left without an airline if a merged between Cyprus Airways (CY) and Eurocypria did not go ahead as soon as possible.
“Both companies face very serious financial problems and you do realise that if a merger and restructuring does not go ahead there is a strong possibility for Cyprus to be left with no airline,” the minister said after meeting the CY board.
CY posted a €25.5 million loss for the first half of the year and Eurocypria is not faring any better, recently requiring a €35 million cash injection to survive.
“The prospects for the whole year do not seem to be markedly improved thus it is expected that 2010 will close with a very big loss for CY,” the minister told reporters. “It would be a huge blow for the economy and tourism if suddenly Cyprus is left without a national carrier.”
Stavrakis said the losses were due to a reduction in revenue per passenger caused by increase competition on the airline’s main routes to Athens and London.
“In the same way, for similar reasons, Eurocypria faces competition and financial survival problems,” the minister said.
He added that the cabinet has decided to merge the two airlines in order to achieve savings of between €12 and €14 million, although that would not be enough to save them from going under.
“The new company should make more cuts and present a new business plan in order to create a new viable airline,” Stavrakis said.
He struck a note of caution howev er that any plan should be approved by the EU first.
“It goes without saying that the merger and restructuring plan should be approved by Brussels because in all probability it will be deemed a state subsidy,” Stavrakis said.
Despite the state holding a majority stake in the airline, Stavrakis said CY was a public company with a board that would study the matter and decide if it was in their interest to go ahead with the deal.
Asked if people were going to lose their jobs, the minister said it would be up to the companies to decide how to cut expenses.
Earlier yesterday the minister met with the board of Eurocypria and is planning contacts with the unions.
Stavrakis stressed the complexity and difficulty of the venture – a first for Cyprus.
“I think that for the first time in the history of the Republic of Cyprus there will be an attempt to merge two big airlines and restructure amid a global economic crisis.”
