ECONOMY

Cyprus Air survival plan

NICOSIA (Reuters) – Staff at troubled national carrier Cyprus Airways criticized a cost-cutting plan yesterday for demanding too many concessions from workers, but did not reject it outright. A game plan to ensure midterm survival of the cash-strapped carrier warns that operating losses could rise to 28 million pounds ($53.1 million) in 2005, and that the airline could run out of cash within the next two months. The strategy mapped out by consultants Booz, Allen & Hamilton and seen by Reuters suggests laying off almost a fifth of staff at the state-controlled carrier, enforceable from Jan. 1, 2006. «I don’t see how the philosophy of this plan can solve Cyprus Airways’ problems,» said Costas Demetriou of the airline’s largest labor union, Sinika. Cyprus Airways is the dominant operator on the east Mediterranean island, but has seen an increasing number of cheaper carriers elbowing their way onto its turf, depressing its bottom line. It posted net losses of 20.4 million pounds for the first half of 2005. The report was designed to make a case to European Union regulators for a 58-million-pound government-guaranteed loan to ensure the airline’s midterm survival. «At the current rate of cash burn it is estimated that the airline will run out of liquidity before the end of 2005,» the report stated. It earmarks most of the redundancies in the airline’s finance and catering departments, and seeks pay cuts of 8 percent for pilots, and 5 percent for the remainder of staff. It also diminishes returns on staff pension funds. «As far as the finances of this plan is concerned, it looks like they want our head on a platter,» said Demetriou. A pilots’ union representative said the plan was being reviewed.