ECONOMY

Cyprus Air plans job cuts

NICOSIA – Job cuts are inevitable at cash-strapped Cyprus Airways in a survival package to be put to authorities for approval next week, the vice chairman of the national carrier 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 closing down a loss-making Greek subsidiary in May. The company was working on the best possible redundancy package for an unspecified number of its 2,000-plus staff, Vice Chairman Frixos Savvides said. «This is the end of the line and we have no option but to proceed with drastic cuts in our costs, which means that quite a number of people will be made redundant,» Savvides told Reuters in a telephone interview. Savvides would not comment on the number of redundancies the airline had in mind. «We know more or less what the magic number is but, of course, we have to wait until this is official and in agreement with the consultants’ report. And we need to tell the people who are affected so they don’t have to read it in the newspapers first.» The board was due to review a survival plan, which also includes spinoffs of non-core business, today. It would also be given to labor unions for consultation, he said. 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. The restructuring plan will also require EU approval. Restructuring options also include looking at the viability of running two separate airlines within the group and outsourcing. The group maintains one airline for scheduled flights and a second subsidiary, Eurocypria, for chartered flights. Past attempts at downsizing the highly unionized work force have had mixed results. The company axed 12 senior executives last year but was met with stiff opposition when it tried to make others redundant at the start of 2005.