ECONOMY

Cyprus Airways recovery plan

NICOSIA (Reuters) – Cyprus Airways has presented a strategic plan to the government designed to help the ailing national carrier return to the black by 2006. The plan, compiled with the help of foreign consultants, includes possible redundancies, an overhaul of flight schedules and selling off or leasing at least two aircraft. Cyprus Airways has a fleet of 19 aircraft, divided between the national carrier, its charter arm Eurocypria, and its Athens-based carrier Hellas Jet. Hellas Jet was created in 2003 to tap an anticipated increase in passenger traffic ahead of the Olympics in Athens this month, but the airline has so far cost the national carrier 10 million pounds ($20 million) without showing a profit. In addition to the rapid expansion of the fleet between 2002 and 2003 under the previous board, stiff competition and steep repayments for the new aircraft knocked a sizable dent in the finances of the carrier, which made a 20.9-million-pound net loss last year after a net profit of 10 million in 2002. «Based on the plan, the company’s damages should be lessened by the end of 2005, and as of 2006 it should be back in the black,» Communications and Works Minister Haris Thrassou told reporters after a meeting with the airline’s chairman Constantinos Loizides on Monday. A board member with the airline said that with the continuing losses, it would run out of cash by November. He said it currently owes 40 million pounds, which he said was «covered.» He did not elaborate, but said it would seek to secure bridging loan funding to ensure its survival after November. Thrassou said the strategic plan was not a final document, but rather a starting point for changes to cut costs and improve the airline’s finances and productivity. He said, however, there was a strong likelihood that at least two of the airline’s Airbus A320s would be sold off or leased by October or November. A decision to reduce the fleet would have a knock-on effect on personnel levels at the airline, which now has a highly unionized staff of around 2,000. But Thrassou said nothing would be done without prior consultations with staff and unions, although he did warn that staff cuts, if they were warranted, would go right to the top.