In 1960, the then newly independent Republic of Cyprus became the majority shareholder with a 53.2% holding. BEA’s stake was reduced to 22.7% and private individuals held the rest. It hired and trained Cypriot nationals as the flight crews, but still relied on the UK airline for aircraft. Around 1965 a winged mountain goat, the flying mouflon, was adopted for the airline’s logo.
At the start of the Turkish Peace Operation in 1974 an attack on Nicosia International Airport caught all five of Cyprus Airways aircraft on the ground with a Trident being destroyed leaving wreckage of its tail there today. All operations were suspended at the end of hostilities in 1974, as the only airport of the island had to close. Immediately the government of Cyprus built a small terminal in Larnaca that allowed Cyprus Airways to restart operations from there on 8th February 1975. The economic loss to the airline of the 1974 troubles was an estimated 1.6 million Cypriot pounds.
But, during the 1980s CA expanded with British Airways inheriting the BEA shares and selling all but 5% of them to the Cypriot government. Private investors owned the remaining 24.14%.
After record profits in the mid 80s, British Airways sold its remaining shares in 1991 so that the RoC owned a 80.46% stake. The Company was doing so well that in 1992 it founded Eurocypria Airlines Ltd to fly European tourists to Cyprus on a charter basis as it expanded services including duty-free operations at Larnaca and Paphos airport. In 1994 the company had a profit of CYP 13 million profit that caused it to enter the new millennium with a new livery and an ambitious fleet renewal programme and founding Hellas Jet in Athens (Greece) in 2003 that never made a profit.
As it started to find itself in financial trouble in 2006, the government bought Eurocypria. By 2010, the airline’s operating loss was €4.9 million and, in 2011, the airline admitted a continuing financial crisis allied to significant increase in fuel prices that resulted in it issuing a profits warning to the Cyprus Stock Exchange. Its loss for the first half of 2011 was €29.3, an increase of €3.8 million over the respective period of 2010.
Various schemes were tried, including restructuring, having code share agreements with other airlines and receiving CY flight numbers on the three internal UK destinations from Virgin Atlantic to Aberdeen, Edinburgh and Manchester.
Following the continuing poor financial results in February 2012, the RoC government chose to raise the company’s share capital by selling the state-owned majority of shares. The first official announcement that the airline was up for grabs was in May 2012. The Cyprus Stock Exchange suspended dealing in Cyprus Airways shares on 23rd July 2012 as there was a delay by Cyprus Airways in submitting and publishing its annual financial statements for the year ended 31st December 2011. A year or so later a statement revealed that there was a loss after tax of €55.8 million for the year ended 31st December 2012 compared to a loss of €23.9 million in 2011.
On 6th March 2013, the European Commission started an investigation, which it plans to complete by October, into whether the government’s €73 million rescue loan of December 2012 and its €31.3 million contribution to a capital increase in January 2013 w
ere in breach of EU rules on state aid.
Cyprus Airways confirmed, on 13th March 2014, the sale of its second slot at London Heathrow Airport to Middle East Airlines for €6.3 million.
The Cyprus Mail, in its edition of 7th February 2014, commented: ‘It may be too little too late for Cyprus Airways’ and wrote that the chairman of the airline urged the government to re-think its policy regarding its plans to ‘pursue an open skies policy’. Such a course of action would, he thought, weaken the survival prospects of the national carrier. In a rather terse ‘tweet’ the RoC Finance Minister, Haris Georgiades, responded: “The government pursues an open sky policy. The monopoly of Cyprus Airways to be ended.”
On 5th July 2014, the online LGC news announced, under the headline of ‘Cyprus Airways closure imminent’, which, if the EC did not accept the restructuring put forward by the airline then Cyprus Airlines faced bankruptcy. This is in spite of the taxpayers’ €250million already given to the company over recent years.
Finance minister Harris Georgiades told the House Finance and Watchdog committees:
“The company has sold all of its assets, its operational cost is still high, employees have to be let go, wages have to be cut and the rescue plan is yet to be fully implemented. And all that could be in vain if the EU Commission rejects the proposed
restructuring plan. In that case, the company will close down.”
If the EC says that the funding was illegal then, the airline will have to return the money thus making it bankrupt. The company has now sold all of its assets worth €111m. Should the EC find that the funding was legal and approve the restructuring plan allowing the airline to survive, the Finance Minister says that it still will not be viable and that the only answer is to find a strategic investor. Money will be spent on restructuring the company, or, should it close, on compensating employees.
Later this year the airline plans to move Stansted, London’s smaller and cheaper airport.
The big question is whether the RoC national carrier will be operating in 2015?
Meanwhile, on the other side of the Green Line, in the TRNC, 170 staff belonging to Cyprus Airways Service (CAS) have lost their jobs; as was reported on 3rd July 2014 by LGC News online under its headline: ‘Sacked airport staff continue to protest’.
Turk-Sen, the Federation of Cyprus Turkish Workers Trade Unions, protested in front of the Prime Ministry after workers reportedly received a ‘written notice’ of dismissal taking effect from 5th August. The sacked CAS personnel, members of Hava-Sen, and others chanted slogans: ‘We would rather die than give up’, ‘Privatise Parliament’ and ‘Unity and Solidarity’. The Hava-Sen and Turk-Sen leaders, invited to meet with PM Yorgancıoğlu, then entered the parliament building.
Turkey’s airport services company HAVAŞ and Cyprus Turkish Airlines established Cyprus Airport Services (CAS) Limited in 2007 to operate at Ercan airport. Time will show whether the job losses are linked with the lease of Ercan and its services by the last government to the two Turkish and one TRNC-based company.