ECONOMY

Cyprus Air prepares restructuring plan for EU approval

NICOSIA – Loss-making Cyprus Airways is to complete a restructuring plan for an EU-approved rescue handout by October, the company said yesterday. The group, in which the government owns a majority stake, posted a net loss of 20.4 million ($43.8 million) for the first half of 2005, hit by low-cost competition and the costs of winding down a Greek subsidiary it shut in May. The survival package is a must for the carrier to receive further rescue aid. State financial support for the airline, which takes the form of a loan guarantee, must be approved by the European Union. «The plan will be given to unions and the government for discussion by September 20 and then the government will submit it to the European Union by the end of October,» an airline source told Reuters. The national carrier obtained a government-backed and EU-approved loan of 51 million euros in May to stay afloat while it goes through an overhaul. Restructuring options include looking at the viability of running two separate airlines within the group, possible redundancies and outsourcing. The group maintains one airline for scheduled flights and a second subsidiary, Eurocypria, for charter flights. Financial difficulties forced Cyprus Airways to suspend operations at its Greek subsidiary, Hellas Jet, in May. It also discontinued operations at Cyprair, an organized tour subsidiary. Past attempts at overhauling the group have had mixed results. The company axed 12 senior executives late last year but had trouble pushing through further cuts affecting others in the highly unionized workforce of 2,400.