ECONOMY

Aegean Cronus says it can take the rough with the smooth

Steeper airport fees, a merger and the September 11 attacks on the US combined to strike a serious blow to Aegean Cronus in 2001, but Greece’s only private airline said it had quickly shifted resources to minimize its losses. «It was quite an explosive mix,» the airline’s general manager, Dimitris Gerogiannis, said in an interview on Tuesday. «We took quite a hit after (these) events.» Revenues rose by about 6 percent to 170 million euros ($149 million) in 2001 for the airline, one of the first to obtain a license in Greece’s newly liberalized market 10 years ago, but net losses came to about 25.5 million euros, he said. Aegean Cronus, the result of a merger between two small domestic airlines in April last year, is the only remaining Greek competitor to the ailing state Olympic Airways after Axon Airlines suspended operations in October. Gerogiannis said Aegean Cronus had quickly earned a reputation for reliability and quality and its planes were 63 percent full in 2001, a better loading than Olympic’s. Greece’s government, banned by the EU from giving more handouts to the debt-ridden state airline, is in the process of privatizing Olympic. Local hit Although cutting seriously into the state carrier’s turf, Aegean Cronus saw traffic on its 11 domestic destinations take a 20-percent hit in 2001, with people wary of air travel after September 11 and a brand-new Athens airport increasing fees for airlines, he said. «This airport is a very expensive airport, one of the most expensive in Europe,» Gerogiannis said. Athens’s gleaming new airport at Spata has reduced fees twice since opening in March but is still more expensive than the now defunct 1960s Hellenikon hub. The operator, Athens International Airport SA, says its fees are middle-of-the-range for Europe. To cope with the declining local passenger demand, Aegean Cronus shifted attention to its charter business and six international destinations – Rome and five German cities. «We have the flexibility to shift our capacity,» Gerogiannis said. «We’ll move the business around to fit the market.» Offered domestic capacity was reduced by 25 percent and two more aircraft were added to the sole airplane serving charter flights, he said. Staff was also reduced by 20 percent in 2001. More charters Aegean Cronus plans to double the charter business in 2002 from 12 percent of total revenue in 2001. International flights make up 30 percent of business revenue. «We see a potential for developing the charter business in Greece,» Gerogiannis said. «Hopefully the market will pick up again.» The airline, which has grown from a 10-percent market share in 1999, to 33 percent in 2000 and about 43 percent in 2002, has kept a steady strategy despite the international crisis – becoming a regional airline with quality services, he said. In 2002 the company wants to reduce its cost base by eliminating duplication resulting from the merger, renegotiating aircraft rents and improving distribution systems. Depending on whether a signaled industry recovery shows it can be sustained, Aegean Cronus may expand its international network and even get more planes, Gerogiannis said. The airline now operates 15 aircraft, including six Boeing 737-300s and -400s, six Avro RJ100s, three ATR 72 turbo-props and two Learjet 55s. «As we approach the summer season, we are waiting to see international traffic and how the domestic market does,» he said. «The past few months showed it was stabilizing; we want to see if it is sustained.» The company will also look into cooperation with other airlines beyond carrying regional traffic for major carriers such as Lufthansa, British Airways and Air France, he said. He would not comment on whether a foreign airline had offered to buy Aegean Cronus.