Nine firms bid for struggling Cyprus Airways, including Aegean

Nine firms have made non-binding bids for Cyprus Airways with Ireland's Ryanair and Greece's Aegean Airlines among those still interested in buying the loss-making national carrier, a report said Thursday.

There has been no official announcement since the deadline for bids closed on Wednesday but the Phileleftheros newspaper said nine of the 14 firms that had expressed initial interest had tabled proposals.

Also still in the running are Israel's Arkia and Spanish Group Arevenca in collaboration with Fly Aruba.

But Romanias low-budget Blue Air and Russias S7 have pulled out, the newspaper said.

Phileleftheros said the interested parties are concerned that Cyprus Airways is paying too much for its six leased Airbus aircraft, while pilot salaries are also deemed too high.

It said proposals included making Cyprus a regional aircraft maintenance hub and increasing the Cyprus Airways fleet as it expands.

In August, Ryanair CEO Michael OLeary met with Cypriot officials and proposed how he could turn Cyprus Airways into a profitable operation by increasing passenger traffic by 500 percent over three years.

He said with the help of his low-cost airline, Cyprus Airways would experience rapid growth, with new routes and more flights, increasing passenger numbers to three million a year from the current average of 500,000.

The debt-ridden government, which is dependent on a 10 billion euro ($13 billion) bailout agreed with international lenders last year, owns 93 percent of the troubled carrier and wants to offload it.

Greece's Aegean Airlines, which has also held talks with government officials, is seen as another serious contender as it aims to use the island's Larnaca Airport as a second base outside Athens.

It is understood that among key conditions set for the sale are that the airline remain based in Cyprus and that as many staff as possible keep their jobs.

A shortlist will now be drawn up and those on it given financial data on Cyprus Airways and asked to put in a final binding offer. The government hopes to wrap up the process next month.

The airline has been selling off assets, including three time slots at London's Heathrow airport, so it can keep flying.

With a reduced fleet of six aircraft, the airline is struggling to survive against intense competition on its most popular routes to Greece and London.

The airline has implemented several cost-cutting plans, axing staff, scrapping routes and downsizing its fleet, but has failed to stem losses.

It is also under investigation by the European Commission for possible violations of state aid rules in a 31 million euro share capital increase and a 73 million euro state bailout over the past two years. This is another worry for potential buyers.

If asked to give the money back, it would be unable to do so and face certain closure.

Cyprus Airways posted a net loss of 55.8 million euros for 2012, more than double the net loss of 23.88 million a year earlier. [AFP]