MPs approve CY €15m cash boost

THE House Plenum yesterday unanimously approved €31.33 million to increase ailing state carrier Cyprus Airways’ (CY) share capital, adding, however, an amendment whereby the airline will receive €15 million now and the rest once the majority of its board is altered and it presents a feasible restructuring plan.

The amendment, which provides for the remaining €16.33 million to be given in October once the new plan is complete, was passed with just 17 votes against – from ruling party AKEL – and 31 in favour.

According to House Finance Committee chairman Nicolas Papadopoulos, the government still has to request the approval of the European Commission to increase the airline’s share capital.

The DIKO MP added that CY definitely needed to be rescued, though he said there were reservations over the current rescue plan on the table, which was why a new one was requested.

In another amendment, the opposition parties decided that eight of the 11 members of the CY Board of Directors would stand down. Up until now, eight of the board’s members were appointed by the government; from now on, they will be appointed on the Finance Minister’s advice and with the agreement of the house finance committee.

The new board will be expected to present parliament with a new rescue plan in three months time, which will be prepared by “experts and advisors of international prestige”.

DISY’s Averoff Neophytou said that by increasing CY’s share capital, Cyprus may be considered violating EU laws.

“The only way the share capital increase could be considered legal is if private shareholders participate in its increase; something they have stated they have no intention of doing,” Neophytou pointed out.

AKEL general secretary Andros Kyprianou disagreed. “We are not violating European directives; we are moving forward with an increase of the share capital, which complies with the acquis communautaire,” he said.

The ruling party’s MP Stavros Evagorou accused the opposition parties of suffering from “power withdrawal syndrome”, saying the way the law was amended created a seriously dangerous precedent.

“For the first time, an attempt is being made to privatise a state company by law,” said Evagorou, who praised the current CY board for fighting to keep the airline afloat “tooth and nail”.

But the Green Party’s Giorgos Perdikis said obsession to keep CY under state control was damaging. He added that the government must be turning a blind eye to the fact that the airline’s current board had nearly destroyed CY.

“By replacing the eight members of the board of directors, parliament took a responsible approach and took responsibility,” said Perdikis.

State-owned charter airline Eurocypria was mentioned more than once, due to the fact that it went bust months after receiving a €35 million cash injection in 2010, with the Finance Minister at the time – Charilaos Stavrakis – assuring MPs this would ensure Eurocypria’s future viability.