For sale: Cyprus Airways seeks buyers
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.