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Cyprus Airways gets cash

CYPRUS Airways yesterday thanked the parliament’s finance committee for releasing over €16 million earmarked for a share capital increase, which the ailing airline said would help them get back on their feet.

“Cyprus Airways would like to publicly express their gratitude over the House finance committee decision…to release €16,330,000, part of the second tranche of the government’s part of the share capital increase,” CY said in an announcement. The tranche is part of some €31.3 million the airline had requested – and has now received – to help make the airline viable.

Last week the airline asked the state for an additional €73 million in order to better implement its new restructuring plan.

Under the plan, 407  employees would be made redundant, leaving 623 staff who would have to agree to salary cuts to bring wages down to competitive levels, as well introducing working hours that would better suit the airline’s needs.

The head of the House finance committee, Nicolas Papadopoulos, expressed concern over the new request and raised questions over whether they could secure the consent of their European partners.

Parliament, however, has also previously expressed concerns over the €31 million it eventually agreed to release.

During discussions over the summer, lawmakers said they were worried that redundancy plans were too costly because of the compensation due to those who lose their jobs and expressed worries over a previous incarnation of a restructuring plan that the state proposed.

Cash injections in the form of assistance for losses incurred due to a Turkish airspace ban on Cypriot aircraft has been keeping the airline going.

Last year it was given €20 million for losses incurred between 2004 and 2010 and this year it got €5.3 million, representing the extra fuel cost to avoid Turkish airspace.

The airline also benefits from bilateral agreements between Cyprus and non-EU member states and is, for example, guaranteed major scheduled routes for most of the year to and from Russia and Cyprus.

Despite a number of false starts in recent years, CY has been unable to keep up with competition from cheaper carriers and rising fuel costs.

The current plan has been prepared by consultants with Air France-KLM, and was discussed in the House behind closed doors. The airline has said that it wants to start implementation in mid-January next year.

CY yesterday said that “it will do whatever is humanly possible to prove worthy of their chosen duty, to keep Cyprus’ historic airline going, render it competitive so it can grow and become profitable as soon as possible”.

SOURCE: CYPRUS MAIL