For sale: Cyprus Air­ways seeks buy­ers

Financial Mirror (Cyprus) - - FRONT PAGE -

The govern­ment has de­cided to go ahead with the im­me­di­ate pri­vati­sa­tion of na­tional car­rier Cyprus Air­ways (CAIR) by invit­ing ex­pres­sions of in­ter­est from strate­gic in­vestors for its con­trol­ling stake in the trou­bled air­line.

Chair­man Tony An­to­niou that “we ex­pect to have ex­pres­sions of in­ter­est within a week with prospec­tive in­vestors ex­pected to sub­mit their of­fers by the end of Septem­ber.”

Al­though An­to­niou re­frained to men­tion the new in­vestors, he has of late been con­fi­dent that there would be buy­ers for the 93.67% stake held by the govern­ment.

In pre­vi­ous years, the govern­ment stake had been re­duced to be­low 60% to al­low for the shares to be listed in the main mar­ket of the Cyprus Stock Ex­change, but sub­se­quent rights is­sues and state bailouts pushed that level back up again.

The govern­ment has also ap­plied to the Euro­pean Com­mis­sion to ap­prove a pack­age of state aid worth just over 100 mln eu­ros that in­cludes loan guar­an­tees, with the EU’s ex­ec­u­tive body highly un­likely to give the green light due to the fail­ure of past man­age­ments to cut down on costs, driven up mainly by union-im­posed wage hikes.

The govern­ment placed an advertisement in the lo­cal press for an “Ex­pres­sion of In­ter­est for ac­quir­ing the shares or a bun­dle of as­sets of Cyprus Air­ways Pub­lic Ltd.”

KPMG Cyprus is han­dling the process with po­ten­tial in­vestors re­quest­ing rel­e­vant doc­u­men­ta­tion by July 23 from canayiotos@kpmg.com or demetri­oug@kpmg.com .

Over the past year, the air­line has em­barked on an ag­gres­sive cost-cut­ting plan and sold key as­sets, in­clud­ing two slots at Lon­don’s Heathrow air­port, rais­ing about 30 mln eu­ros.

In June, it sold its day­time slot at Heathrow to Amer­i­can Air­lines in a deal worth $31 mln (22.8 mln eu­ros), while in March it had sold its night-time slot to to Mid­dle East Air­lines for 6.3 mln eu­ros in March, less than half a failed bid from Qatar Air­ways that pulled out of talks.

CAIR has cut back on routes and is try­ing to re­duce its un­pro­duc­tive staff to com­pet­i­tive lev­els, as ri­vals make their way into des­ti­na­tions and mar­kets pre­vi­ously con­sid­ered lu­cra­tive for the na­tional car­rier.

Trade unions have been rant­ing about the “sell as­sets, but have yet to pro­pose con­crete al­ter­na­tives.

The air­line said the deal with Amer­i­can Air­lines would “en­hance the com­pany’s liq­uid­ity for 2015” with flights con­tin­u­ing to Europe’s busiest air­port un­til Septem­ber 13. It added that it will trans­fer its Lar­naca-Lon­don traf­fic to Stansted air­port as of Septem­ber 14 and will change its fre­quency and im­prove flight times.

Pas­sen­gers who have booked tick­ets to Lon­don af­ter that will be no­ti­fied by the air­line and their ticket price will be

off” of ad­justed, the air­line said.

The unions have op­posed chair­man An­to­niou’s plans to down­size the air­line by clos­ing down routes, shut­ting of­fices and sell­ing off as­sets, say­ing that Lon­don’s Heathrow busi­ness has not been prop­erly utilised.

An­to­niou re­cently said that an­other op­tion would be to in­crease flights to Lon­don’s al­ter­na­tive Gatwick air­port, while boost­ing the other UK routes pop­u­lar with Bri­tish tourists, such as Birm­ing­ham, Manch­ester and Lu­ton.

CAIR flies to 12 des­ti­na­tions in Europe and the Mid­dle East by per­form­ing around 7,000 and car­ry­ing around 1.3 mln rev­enue pas­sen­gers an­nu­ally.

Its des­ti­na­tions are: Am­s­ter­dam, Athens, Frankfurt, Lon­don, Moscow, Mu­nich, Paris, Sofia, Thes­sa­loniki, Zurich, Beirut and Tel Aviv. The cur­rent fleet con­sists of six Air­bus A320s.

On the other hand, as of April, Bri­tish Air­ways in­creased its flight sched­ule from Cyprus to­wards two of Lon­don’s prime air­ports – Heathrow and Gatwick.

Now giv­ing trav­ellers the op­tion of 17 flights per week, both in­com­ing and out­go­ing tourism has re­ceived a sig­nif­i­cant boost with more travel op­tions.

Upon the re­sump­tion of the Paphos-Gatwick route on March 30, BA pro­ceeded with an in­crease in flights from Lar­naca to Gatwick from 3 to 5 times a week.

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