ECONOMY

Future of Hellas Jet

NICOSIA (Reuters) – Days after deciding to shut it down, Cypriot national carrier Cyprus Airways said yesterday it would buy up the remaining 25 percent of its subsidiary Greek-based Hellas Jet, which is scheduled to wind down operations in May. It would exercise its call option to acquire 25 percent of Hellas from AEF European Capital Investment BV, Cyprus Airways said in a statement to the stock exchange in Nicosia. Company insiders said the call option was a contractual obligation the Cypriot airline had since the inception of Hellas Jet in 2003. The acquisition bill for 25 percent was estimated at between 3.2 million and 3.4 million Cyprus pounds ($7.1-7.5 million), a company source said. Buffeted by cheaper airlines moving in to a recently deregulated market, Cyprus Airways has been trying to rapidly shed excess staff and loss-making units to pull it back to profit. The state, its principal owner, has sought European Union approval to guarantee emergency funding. Hellas Jet, created to tap an anticipated surge in visitors for the Athens 2004 Olympic Games, was clocking up losses of about 1.5 million euros a month, adding to the financial woes of Cyprus Airways. Government officials say Hellas Jet is expected to wind down operations in May. The board of Hellas Jet is expected to rubber-stamp the decision on April 20. Managers at Cyprus Air are now reviewing options on subletting Hellas’s three A320s, and possibly crew, until the leasing contracts expire on the aircraft in May 2006.