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<small>Shocking scenarios for CAIR</small>

07/01/2011 09:10
Cyprus Airways schedule the abolition of a significant number of flights after scenarios according to which the national carrier runs the risk of closing until April if no significant measures for its consolidation are taken.

The Management recommended savings of €30 million in the context of the survival plan so as to reverse its loss-making course. Losses in late 2010 are expected to reach €30 million.

The recommended measures include the abolition of flights to Thessaloniki, Paris, Birmingham, Amman, Jeddah and Riyadh and the reduction of those to Brussels and Manchester.

They also provide for savings on behalf of the Company’s staff, which according to the statements of SYNIKA General Secretary, Andreas Pierides to StockWatch, they stand at €5-7 million, which will stem from the cutback of 10% on their monthly salary for a year and their reduction of 10%.

According to Mr. Pierides, the national carrier also expects the government’s contribution, which is called to pay compensation due to the additional cost from the prohibition of flights over Turkey.

Tough days in April

In the Finance Ministry, the technocrats are examining shocking scenarios for the national carrier and expect that until April or May the Company will face liquidity problems if the survival plan is not adopted immediately.

The Minister had told the Parliament in November that the Company will close in 2011 if its performance remains the same.

Originally, the government will have to submit €55 million, which are the state guarantee in the loan secured by the Hellenic Bank.

Things will be even more difficult for the 1400 employees, who might face unemployment. This scenario will force the state to offer compensations, which might exceed €30 million, since for the 300 Eurocypria employees the total compensation cost is expected to reach €6 million.

At the same time, the economy will lose significant tourist revenues from thousands of tourists that will possibly remain exposed from the closing of the national carrier.

House Finance Committee

The Parliament is already concerned for the latest developments and the delay in taking the consolidation measures.

The issue will be examined by the House Finance Committee on Monday, in the presence of Finance Minister, Charilaos Stavrakis.

At the same time, CAIR Executive Chairman will outnumber to the MPs the problem that the airline faces due to the economic crisis, the survival plan and the relevant measures that must be taken.

Indeed, the meeting will be attended by representatives of the trade unions, who demand the preparation of a completed plan on behalf of the government, stressing that the company will not survive with the contribution of the employees only.

Time margins

Chairman of House Finance Committee and DIKO MP, Nicholas Papadopoulos told StockWatch that the Committee will ask by the Finance Minister to be informed the government’s intentions, while they will examine the views of other parties involved.

He also expressed his discontent for the measures proposed by CAIR, stressing that the Company will not be saved by the staff’s proposals. “I can see that there is no plan”, he noted.

“The government, as soon as it found out that the Company faces viability problems, should have prepared a plan since the time margins are exceptionally narrow for Cyprus Airways”, he said.

“In April or May, the Company will close, just as Eurocypria did”, he stressed.

Vice Chairman of the Committee and DIKO MP, Angelos Votsis stressed the need for measures so that CAIR avoids closing.

“The Committee will take certain initiatives so as to avert the closing of the only national carrier in Cyprus”, he concluded.