NATIONAL carrier Cyprus Airways has come under fire in recent weeks as the airline tries to follow through with a restructuring plan that will see it downsize its fleet and cut jobs.
“Cyprus Airways has been through many changes recently,” says chairman Tony Antoniou. “The company is trying to minimise operational costs. This incorporates the reduction of staff, fleet downsizing to six aircraft and cutting of non-profitable destinations. In addition, rented premises will be minimised with various departments merging into smaller offices.”
The airline, which has posted losses for two years running, is now at the centre of a European Commission probe into whether or not a government-backed aid package of €100,000 million (about $136,000 million) is in line with EU state aid rules.
Government response to the restructuring plans and possible bailout has been divided; with finance minister Haris Georgiades tweeting: “The government pursues an open sky policy. The monopoly of Cyprus Airways to be ended.”
Cyprus Airways has outlined restructuring plans to run from 2012 to 2017. The airline has cut its fleet from 11 airplanes down to just six A320s, and is reportedly looking to lay off 490 of its 1,404 employees.
Further blows for the airline saw its €15 million (about $21 million) deal to sell one of its Heathrow slots to Qatar Airways fall through after the airline breached confidentiality clauses.
However, Cyprus Airways management is determined to pick themselves up and carry on, with Antoniou remaining confident that, once cuts have been made, the airline could return to profit as soon as year-end 2014. “A new aggressive marketing policy has been introduced by coming into an agreement with local travel agents for the operation of charter flights during the summer period and the announcement of attractive packages to the public,” he says.
Cyprus Airways has reportedly entered into agreement with two Cyprus travel agencies, Top Kinisis and Xenos Travel, to offer charter flights to the Greek islands in the summer. The deal is said to be worth an extra €2.4 million (about $3.27 million) to the airline. Meanwhile, its night-time slot into Heathrow remains up for grabs.
Another possible revenue pool could come from code-share agreements, according to Antoniou.
“Cyprus Airways operates a code-share agreement with Middle East Airlines (MEA). Both airlines operate code-sharing flights between Cyprus and Lebanon. As part of our strategy to offer wider travel choices and seamless travel to our passengers, we are looking into entering into more code-share agreements with other airlines,” he confirms.
Cyprus Airways’ services to Beirut are among the airline’s most popular routes, alongside London and Athens, with Antoniou not ruling out further route additions in the Middle East. “Development will continue in the Middle East for certain,” he says.
Cyprus Airways was launched in 1947 as a joint venture between the Cyprus Government, British European Airways (now British Airways) and private investors. The airline expanded rapidly during the 1980s and 1990s, after British Airways sold the majority of its shares back to the Cyprus Government.
The airline expanded its fleet and in 1984 became one of the first airlines in the world to operate the wide-bodied Airbus A310. In 1994, the airline posted record profits of CYP 13 million (about $30.2 million).
By Sarah McCay