Business | Aviation
State carriers may merge to prevent closure
Cyprus's government will merge and restructure its two state-controlled airliners to prevent their bankruptcy, Finance Minister Charilaos Stavrakis said
- Bloomberg
- Published: 00:00 September 4, 2010
Nicosia: Cyprus's government will merge and restructure its two state-controlled airliners to prevent their bankruptcy, Finance Minister Charilaos Stavrakis said.
Stavrakis announced the decision after Cyprus Airways Public Ltd, in which the eastern Mediterranean island's government has a 70 per cent stake, posted a 25.6 million euro (Dh120 million) loss in the first half of the year, compared with a loss of 5.3 million euros a year earlier.
"The outlook for the rest of this year is not notably better and Eurocypria faces similar problems," Stavrakis told reporters in Nicosia following a meeting with the company's board of directors.
Risk
"The risk of a closure of the two companies is very high. It will be a huge blow for both the economy and the tourism industry if Cyprus is left suddenly without a state owned airliner," he said.
The merger, which will require the approval of the European Commission, could result in savings of up to 14 million euros annually, while the new company will have to further reduce costs in order to be viable, the minister said.
The parliament of Cyprus approved in February a 35 million euro capital increase at Eurocypria Airlines to help it avoid bankruptcy.
The carrier, founded in 1991, was bought out by the state in 2006 for 22.9 million euros as part of a rescue plan for its then parent company, Cyprus Airways.
Tourism, directly or indirectly makes up 25 per cent of the Cypriot economy, the euro area's second-smallest.
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