Directors also have a responsibility

The collapse of Cobalt, the island’s first private airline in the post-Cyprus Airways era, may have been doomed from the moment that it inherited management and staff from the former state-owned national carrier.

Unfortunately, together with the long history of know-how and high caliber of flight crew, Cobalt also inherited the laid-back attitude when it came to deal with fundamental problems. Such as fleet shortfall at its launch, delays on scheduled flights and the occasional online glitch preventing such basic functions as additional baggage purchase and seat allocation.

For those who were not acquainted with the exCAIR modus operandi, it was obvious that they did not or could not acclimatise themselves to the psyche that had prevailed at the Flying Moufflon over the past few decades, which itself could not decide whether it was a viable commercial operator or simply an extension of a government department where political favours and connections determined almost everything.

Cobalt came into being almost by fate, coinciding with the demise of state-run Cyprus Airways, with the government giving assurances at the time that the vacuum created in the aviation sector would be filled by newcomers, as well as foreign carriers using Larnaca or Paphos as regional hubs. But Cobalt’s owners, who have pumped tens of millions of euros to get it off the ground, have got nothing in return, apart from bruises and burns from being involved in such a volatile industry.

This did not deter consumers, however, from continuing to buy tickets for Cobalt flights as it frequently offered air fares at competitive levels.

But as with the similar collapse of construction colossus J&P Overseas last week, preceded by the meltdown of other behemoths such as the Cooperative Bank and Marfin Laiki, to name a few, one wonders if apart from poor management, if directors, too, had a measure of responsibility and even accountability.

Simply hiding behind the justification that “this is a private company”, is not enough, especially when directors at other SME businesses are dragged through the courts for non-payment of tax, for guarantees provided to third parties that have defaulted and even for other problems directly linked to the economic crisis of five years ago that hurt small businesses most.

No matter the size or nature of a company, a director should remain true to the core principles of determining the company’s strategic objectives and policies. They are: monitoring progress towards achieving the objectives and policies, appointing senior (and competent) management, and accounting for the company’s activities to stakeholders and shareholders.

A business card with the title ‘Director’ on it means nothing if you are not responsible for the actions of your subordinates.