A wide-ranging package of cost-cutting measures to bring Cyprus Airways back to profitability has received the backing of two of the ailing carrier's trade unions.
After months of tough bargaining with airline management and the Ministry of Labour, the realisation that the airline might not survive without some painful concessions has forced members of the largest union, SYNYKA, which represents 1,300 of the 2,000-strong workforce, and one smaller union, SYDIKEK-PEO, to vote in favour of cuts.
One of the cabin crew unions has rejected the proposals, but this is not expected to hold up the rescue plan. Of more concern is the reaction of pilots' union, PASIPY, which has been most vociferous in its dissatisfaction with plans to cut its members' salaries by 5-8%. It has yet to vote on the proposals.
Under the plan, it is expected that at least 200 staff will be axed, although general manager Christos Kyriakides says that the final figure remains fluid and will depend on the implementation of other elements of the rescue package.
Salary increases agreed previously for this year and next have been postponed and there will be work practice changes to further trim payroll costs. Management is not immune from the axe, with some positions already cut, while the salary of those remaining will be reduced, as in the case of pilots.
Kyriakides points to other areas that the airline will need to deal with to return it to profitability in the next couple of years. "The action plan agreed with the government includes five other key elements, some of which have already been implemented. These include the fleet, network, subsidiaries, commercial and management structure," he says.
Two Airbus A320s have been withdrawn, leaving it with a fleet for 2005 comprising two A319s, six A320s and two A330-200s. This move has enabled the airline to discontinue two loss-making routes and adjust frequencies on others to increase overall aircraft utilisation.
In November Cyprus Airways closed its Cyprair Tours company and is looking for new investors for its loss-making Greece-based airline Hellas Jet, which has not reached its revenue targets. Kyriakides adds that its charter arm, Eurocypria Airlines, which is not under direct threat, will continue as before.
If successful, these measures are expected to save Cyprus Airways €38 million ($50 million) a year, says Kyriakides. In 2003 the carrier made an operating loss of $70 million on revenues of $365 million. However, operating losses for the first half of 2004 increased by nearly 20% to $56 million, leading the carrier to fear a worse result for the full year. A proposed government guaranteed loan of some c100 million to help the airline through temporary cashflow problems will need approval from the European Union.
GUNTER ENDRES LONDON
Source: Airline Business
