Cyprus could bail out charter airline

NICOSIA (AFP) – Cyprus will buy out Cyprus Airways’ charter subsidiary Eurocypria as a last resort if it fails to push through a tough restructuring plan to save the state-owned carrier from closure, the government said on Saturday. The decision was reached following an extraordinary Cabinet meeting where a ministerial committee was set up to negotiate with Cyprus Airways the sale «under the best possible financial terms.» If Cyprus Airways is forced to shut down, Eurocypria could operate as an independent airline that would keep open the flag-carrier’s slots at major airports and keep tourists coming to Cyprus. «The Council of Ministers confirmed its decision that the restructuring plan for Cyprus Airways is final and cannot be changed one iota,» said Communications Minister Haris Thrassou after the meeting. Only two of the airline’s five major unions have formally accepted the restructuring plan, while pilots, cabin crew and other staff have yet to give a response after a series of missed deadlines. According to Cyprus Airways sources, the three larger unions are expected to «grudgingly» give their approval within the coming days. «We believe by next week the bigger unions will come around,» an airline source told AFP. The government – which owns 70 percent of Cyprus Airways – said that unions had until 6 p.m. on January 5 to accept the mass redundancy package. But the government is taking no chances and needs a fallback option to stem the company’s cash drain – an estimated 2 million Cyprus pounds a month (3.5 million euros). «No decision has been taken to close Cyprus Airways but that depends on further developments,» said Thrassou. It appears the government will press ahead with the Eurocypria buyout if the work force rejects the mass redundancy offer. Analysts have said Eurocypria could be worth 20 million Cyprus pounds (35 million euros), a figure that would cover Cyprus Airways’ debts if it closed. The airline is currently losing an estimated 25 million Cyprus pounds a year and estimates its cash flow will dry up by the end of the week. Saving the national carrier is seen as crucial to the island’s tourism industry, which is a key contributor to the economy.

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