CY could close if unions fail to agree

By Jean Christou, Cyprus Mail, [2 November 2005]

CYPRUS Airways (CY) chairman Lazaros Savvides yesterday warned that unless agreement was reached with the unions on a controversial restructuring plan, the airline would be forced to close.

Savvides' comments came within hours of a statement by pilots' union PASIPY saying its members had given it the green light to strike if any proposals in the plan were implemented.

The latest crisis in the national carrier comes two days before the restructuring package is to be submitted to the EU for approval, in order for CY to secure a 58 million loan needed to save the company from closure. The state-owned airline already secured approval for a 30 million loan last May, which will be paid back from the 58 million. The remainder is to go on the 10 million cost of redundancies and 18 million for the cost of restructuring under the plan.

Under the plan, CY must axe 343 jobs, almost one fifth of its staff, or face bankruptcy by the end of the year. The plan also includes across-the-board salary cuts starting with eight per cent for pilots and five per cent for the remainder of staff, plus other cuts in benefits, most notably to provident funds.

Management was hoping unions would agree in principle so that the plan could be submitted to the EU by Thursday's deadline. Details could then be ironed out by the end of the year in order to implement the plan by January 1, 2006, they said.

But after its general meeting yesterday, PASIPY said its members rejected the plan in its totality and would refuse to negotiate it. The union said it was disappointed with the actions of the new CY board to date, the management structure of the airline and the extension of CY activities to its low-cost carrier Eurocypria at the expense of the parent company.

It called on the company to respect collective agreements with the unions and warned if any part of the plan was implemented in January, it would cause pilots to react “immediately and dynamically”.

Responding to the union, CY chairman Lazaros Savvides said he was also disappointed with the way things were going, and called the unions to a meeting to show them how vital it was for the airline to submit the plan. “If we don't manage to reach an agreement, the company could close,” he said. “We have to take all the options into consideration and one of these is the closure of the company. This plan is the best possible option for the company and the last chance for the company to survive.”

PASIPY president Polis Economou said the CY board had given certain promises to the union that it was now reneging on. “They said they were going to call a halt to what has been going on at Cyprus Airways. It's been 10 months, and not only did this not happen but the situation is worse than what it was,” he said.

Economou also questioned what had happened to the first 30 million. “Where is the money?” he asked. “I'm afraid we have to question the integrity of the people sitting opposite us at the negotiating table.”

CY's biggest union CYNIKA is also refusing to negotiate. They want the original consultants' report that the plan is based on. The union has sent a letter to the company saying that if the plan is submitted to the EU, they will not support it. “We don't know yet if they are going to go ahead and submit it,” CYNIKA president Costas Demetriou told the Cyprus Mail last night.