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Cyprus Internet Directory [ Full speed ahead on airlines’ merger study ]

Full speed ahead on airlines’ merger study

Author: 
Charles Charalambous

FOUR of the five Cyprus Airways (CY) unions said yesterday  they were “satisfied” after receiving a briefing from Finance Minister Charilaos Stavrakis on the study into the possible merger between CY and state-owned Eurocypria.

“We are fairly satisfied after the meeting, and we are waiting to be invited soon to receive a further briefing”, said President Andreas Pierides, head of the national carrier’s biggest union CYNIKA.

The report on the merger is being carried out by consultants KPMG.

“We believe that the struggle begun by the CY staff, for the creation of a single national carrier that will be strong and competitive within the new environment developing in Europe, can become a reality,” said Pierides.

Representatives of four out of the five CY unions attended yesterday’s meeting: CYNIKA, plus the pilots union PASYPI, SYPKA, which represents cabin crew and ASYSEKA, the union for SIDIKEK-PEO was not represented.

Stavrakis said recently his Ministry intended to commission a feasibility study on merging the two airlines to see what the long-term benefits would be. Pierides said the unions were told that air industry specialists were participating in the study, which is expected to be completed within a few months “at the latest”.

The unions presented the Minister with their own memorandum. Among other things, they are calling for a single commercial entity with one board and management structure. They also want the state to retain its current 70 per cent share holding in CY. They want a rationalisation of the two fleets, respect for the current collective agreements, and consolidation of current jobs.

PASYPI President Charalambos Tappas said the mere fact the study was commissioned, demonstrated the correctness “of the long-standing position we have held”.

The CY unions have regularly echoed the board’s repeated calls over the last twelve months for Eurocypria to be merged with the national carrier, arguing that the island is too small a market to sustain two air carriers. The CY unions’ stance has included threats of strike action and a demonstration outside the House in February.

On the other hand, Eurocypria CEO Lefteris Ioannou has consistently argued that there are significant differences between the two carriers. Eurocypria’s operating cost structure is radically different to CY’s, its customer base is almost exclusively tourists, and most of its flights are to destinations not served by CY.

During the row which began last September over the government’s proposal to give Eurocypria a €35 million cash injection in the form of share capital, Stavrakis regularly emphasised Eurocypria’s vital role in bringing some 150,000 tourists to Cyprus every year. The extra funding was finally approved by the House of Representatives in mid-February.

Stavrakis’ commissioning of the current merger study poses the question of EU approval. When CY sought government guarantees for loans of €78 million in 2007, the European Commission (EC) gave the green light on condition CY would not merge with another company.

Stavrakis told the House Finance Committee two weeks ago that, considering the current economic climate, he was convinced the EC would look at the possible merger in a different light.

The Finance Minister is scheduled to meet the unions representing Eurocypria employees to brief them on the merger study on Monday.



(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.



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