The minister added that the government was preparing for the worst-case scenario. Georgiades, along with Communications Minister Marios Demetriades, was invited to a joint session of the House Finance and Watchdog Committees that ran late into the afternoon, with little to show by way of constructive discussion.
Georgiades said scenarios had been drafted to secure air links between Cyprus and overseas destinations in case the national carrier folded.
“We’re trying to exhaust all possibilities for the survival of the company. Government plans include also a worst case scenario,” he said.
“The continuation of Cyprus Airways requires additional moves” related to further reductions of the number of employees as well as to cutting benefits, he added.
Georgiades also said that a supplementary budget of €10m has been submitted to compensate the employees in case CY closed down.
A host of guests invited by deputies – 49 in all – got a chance to speak their minds at yesterdays seven-hour session but had little more than dead-end arguments to offer, which Georgiades comfortably swatted away.
Measuring his words carefully, the finance minister addressed the same concerns he has been hearing about over the last few months. He said the main problems was the airline was a consistently loss-making enterprise that had failed to compete in a free market, that had received some €75 million in unauthorised state aid, which the European Commission might ask it to pay back in the coming months.
“Within the first three months of this administration, staff numbers were reduced from 1,100 to 560 – and the company was still making losses,” said Georgiades.
A rescue plan submitted earlier this year called for further staff reductions and asset sales, and projected 2014 to be a break-even year for the carrier before it returned to profitability in 2015.
But the plan was quickly placed on the back burner after the government realised that a European Commission ruling – expected by the end of the year – might force the company to pay back taxpayers money, effectively shutting the airline it down.
Instead, the government has focused its efforts on finding a strategic investor that would take over the company, and invited “expressions of interest” through ads placed in foreign press. The process does not seem to be going anywhere however.
Twenty-two expressions were initially filed, of which eight were discarded as the ultimate investor had not been identified, and the government ended up with nine legitimate candidates.
Subsequent screening indicated that only two – Ryanair and Aegean – met all the conditions listed by consultants KPMG – what Cyprus Airways’ legal advisor Polys Polyviou termed “proof of funds” – and non-binding offers were asked of them.
But talks, Georgiades revealed, have stagnated as neither is interested in investing in a company that might have to repay tens of millions to the Cyprus government. Both appear interested in buying certain assets of the national carrier, but on terms deemed grossly unfavourable to the government.
“We are looking for a real investor and not a charlatan,” said Georgiades. “We are prepared to sell the company to an investor or to the employees.”
He said a strategic investor should have been sought as long ago as 2007, when the European Commission approved the first state aid package on a one-off basis.
Georgiades added that the European Competition Commission ruling – scheduled for last September but pushed back at the Cyprus government’s request for an extension – must be expected soon, in light of the new Commission assuming its duties. “We have bought all the time we were going to buy,” Georgiades said.
The ensuing conversation added little of import, as Cyprus Airways board members aired their dismay at being kept in the dark of the process and company employees offered emotional pleas for the government to try harder to save the company.
“Let me be as clear as I can: there has been not a single meeting, phone call or teleconference that was not attended by Cyprus Airways’ legal and business advisors, and board members,” Georgiades told deputies, clearly implying that board members kept in the dark was not the government’s doing.
“Closing the company is neither our choice, nor our decision,” the employee reps heard. “But make no mistake: even the best-case scenario calls for yet more redundancies so that the company can return to profitability.”
The marathon session did offer some lighter moments, as when one deputy got up and strolled around the room, casually telling reporters that he had been “bored,” or when Attorney-general Costas Clerides and Auditor-general Odysseas Michaelides – who only got a chance to speak roughly two hours and about a dozen speeches into the session – switched on their mikes only to say they were not involved in the matter before departing.
Likewise, when the pilots’ union head Petros Souppouris took the floor as a guest of the House committee, only to reveal he had forwarded his invite to his own guest, a Spanish man named Ignacio Plaza.
Deputy Secretary General and legal advisor of the European Cockpit Association, Plaza was meant to deliver a ‘five-minute’ crash course on how to escape a negative ruling by the European Competition Commission.
Committee chair Giorgos Georgiou would have none of it as a proxy-invite contradicted the rules, and pointed out to Souppouris that he had been extended the invitation, not Plaza.
But a gleeful Georgiades pounced at the chance to have some fun, and stepped in.
“Mr Georgiou, I’m very curious to hear how we can solve our problem in five minutes,” he grinned, and the chairman relented. In the end, Plaza was allowed to speak from his hand-written notes, and listed some arguments – in English, but in a thick Spanish accent that seemed almost surreal, given the setting – that could be made to the Commission – financial crisis, geographical crisis, and the precedent of Malev airlines, the closure of which apparently caused a GDP contraction of 3.0% in Hungary.
“I hope he is right,” was all a clearly disappointed Georgiades could muster in response.
And hours into the meeting, tempers started flaring. In one remark, Georgiades included an off-hand barb that implied that most of the responsibility for the situation the airline was currently faced with lay with AKEL and the previous government, which apparently infuriated MP Irene Charalambidou.
“(Former chairman) Haris Loizides created HellasJet and created the black hole you are referring to,” she screamed at the finance minister. “And (DISY chief Averof) Neophytou hired an extra 1,200 employees when he was Communications Minister,” she added. In turn, this enraged chairman Georgiou, who instructed the minute-keeper to stop writing and snapped at Charalambidou that she may not interrupt.
But the chairman’s stern warning was not left unanswered by AKEL MP Stavros Evagorou, who abruptly left the session in protest of “fascist behaviour.”
Source: Cyprus Mail
