Further to the announcement dated March 4, 2013 on the indicative results for the year ended December 31, 2012 and following today’s reports in the daily press, Cyprus Airways Public Ltd would like to clarify the follwing to inform the investing public.
1. The results for the year ended December 31, 2011, which show lower loss than those of 2012 include non-recurrent revenues of €31.7 million and are composed of: (i) €22 million that are the Company’s revenues from the exechange of slots with Virgin Atlantic Airways at the Hethrow Airport and (ii) €9.7 million that are a profit from the sale of one A320 aircraft and three spare aircraft engines. Therefore, the references to the press of a "doubling" in operating losses from 2011 to 2012 are virtually non-existent. It is also noted that the indicative results for 2012 include a reduction of €6 million in deferred tax assets which is a non-recurring expense.
2. During 2012, the competition on the main routes of the Company intensified, a development that affected negatively the Company’s revenues. The competition was not only intense, something that was expected, but grossly unfair as it derived from low-cost subsidized companies, knowingly and with the assistance of the state, from the Incentive Plan of Hermes Airports Ltd. It is noted that Cyprus Airways, which carry to Cyprus the highest number of tourists, do not receive any subsidy through the Incentive Plan, the contribution of which in the country's economy is questionable.
3. During 2012, two restructuring plans were prepared, the first of the Management and the then Management of the Company during the first quarter of 2012 and the second from Air France Consulting Ltd in November 2012. Air France Consulting was appointed by the new Board of Directors under the provisions of the Supplementary Budget Law (No. 4) of 2012 (the "Law») 50 (H) and was approved by the House Finance Committee. Both plans include: (i) significant reductions in the operating expenses of the Company primarily through the planned redundancies of supernumerary staff, additional reductions in staff salaries and additional measures to reduce costs to a minimum extent and (ii) an increase in revenue through product improvement, streamlining of the flight program, increase in the number of seats in the aircrafts and agreements with other airlines for flights of Code Share Agreements and other commercial partnerships.
No plan and no action have been applied to the desired level during 2012 and the responsibility for this does not lie to the Company. Specifically it is noted that for reasons beyond the control of the Company and the Board of Directors, the staff redundancies and additional reductions in staff salaries have not been materialized as is erroneously stated in some reports.
4. The current Board took over on August 23, 2012 in a very difficult period for the Company. The monthly report on the results of the year, which was prepared in August 2012, provided an operating loss of €50 million. The current Board's actions limited the losses to a slightly lower level. Furthermore, the current Board has implemented all the provisions of the Act, within the specified time frame.
5. The Company recognizes that the losses incurred in 2012 should not be repeated and is making every effort towards this direction. The Company may become viable only with the drastic reduction of operational losses and the only way to achieve this goal is the immediate implementation of the new restructuring plan including direct payment of funds as provided in the Plan. Therefore, it calls on all parties to contribute substantially to the Restructuring Plan to be directly applicable.
1. The results for the year ended December 31, 2011, which show lower loss than those of 2012 include non-recurrent revenues of €31.7 million and are composed of: (i) €22 million that are the Company’s revenues from the exechange of slots with Virgin Atlantic Airways at the Hethrow Airport and (ii) €9.7 million that are a profit from the sale of one A320 aircraft and three spare aircraft engines. Therefore, the references to the press of a "doubling" in operating losses from 2011 to 2012 are virtually non-existent. It is also noted that the indicative results for 2012 include a reduction of €6 million in deferred tax assets which is a non-recurring expense.
2. During 2012, the competition on the main routes of the Company intensified, a development that affected negatively the Company’s revenues. The competition was not only intense, something that was expected, but grossly unfair as it derived from low-cost subsidized companies, knowingly and with the assistance of the state, from the Incentive Plan of Hermes Airports Ltd. It is noted that Cyprus Airways, which carry to Cyprus the highest number of tourists, do not receive any subsidy through the Incentive Plan, the contribution of which in the country's economy is questionable.
3. During 2012, two restructuring plans were prepared, the first of the Management and the then Management of the Company during the first quarter of 2012 and the second from Air France Consulting Ltd in November 2012. Air France Consulting was appointed by the new Board of Directors under the provisions of the Supplementary Budget Law (No. 4) of 2012 (the "Law») 50 (H) and was approved by the House Finance Committee. Both plans include: (i) significant reductions in the operating expenses of the Company primarily through the planned redundancies of supernumerary staff, additional reductions in staff salaries and additional measures to reduce costs to a minimum extent and (ii) an increase in revenue through product improvement, streamlining of the flight program, increase in the number of seats in the aircrafts and agreements with other airlines for flights of Code Share Agreements and other commercial partnerships.
No plan and no action have been applied to the desired level during 2012 and the responsibility for this does not lie to the Company. Specifically it is noted that for reasons beyond the control of the Company and the Board of Directors, the staff redundancies and additional reductions in staff salaries have not been materialized as is erroneously stated in some reports.
4. The current Board took over on August 23, 2012 in a very difficult period for the Company. The monthly report on the results of the year, which was prepared in August 2012, provided an operating loss of €50 million. The current Board's actions limited the losses to a slightly lower level. Furthermore, the current Board has implemented all the provisions of the Act, within the specified time frame.
5. The Company recognizes that the losses incurred in 2012 should not be repeated and is making every effort towards this direction. The Company may become viable only with the drastic reduction of operational losses and the only way to achieve this goal is the immediate implementation of the new restructuring plan including direct payment of funds as provided in the Plan. Therefore, it calls on all parties to contribute substantially to the Restructuring Plan to be directly applicable.
Wednesday, 6 March, 2013 - 10:55