ECONOMY

Cyprus Airways’ losses up in H1

NICOSIA (AFP) – Cash-strapped Cyprus Airways yesterday reported a first-half net loss of 28.69 million Cyprus pounds ($56 million), sharply worse than the 19-million-pound loss a year earlier. However, 3.65 million pounds of the losses were absorbed by other shareholders in the group’s Greek-based airline Hellas Jet unit. Operational costs increased by 19.9 percent to 116.3 million pounds, mostly due to the higher expenditure of running Hellas Jet, which started flying in June 2003, and to a 10.8 percent increase in the number of flights. The company said intense low-budget competition and rising fuel prices are hurting it. «Under normal circumstances, the results of the second half should improve on the first six months because it covers peak traffic but as a result of EU accession passenger numbers and fare levels have been affected,» a statement said. The state-owned airline faces stiff competition for its money-spinning destinations to London and Athens in a deregulated market where the carrier can no longer protect these routes since Cyprus joined the European Union on May 1. «Combining this with a significant and continual increase in fuel prices will make the second half of the year very difficult, so we expect the results for 2004 to be substantially more negative than 2003,» the company added. The airline suffered 20.9 million pounds in losses in 2003. Despite liberalization of the skies, Cyprus Airways recorded a slight increase in market share of 38.4 percent against 37.4 percent a year earlier. But duty-free sales took a dip as EU accession outlawed such goods, with the travel shops seeing a 2.1-million-pound decrease in income to 20.9 million. To cut down on an estimated debt of 40 million pounds, Cyprus Airways has launched a survival package. It is seeking to cut jobs, trim the fleet, sell off subsidiaries, abandon lossmaking routes and outsource services to save 25 million pounds a year. Under the plan, Cyprus Airways proposes to lay off 172 permanent staff and 250 seasonal workers, two Airbus A320s will be withdrawn from service and scheduled flights to Birmingham, Budapest and Warsaw will be axed. Among its 2,000 staff, the airline has some of the highest wage-earners on the island on its 35 million pound payroll. It is also burdened with a leasing bill for its new fleet obtained in 2002.