The airline announced yesterday that CY raked in €1.2 million in profits after tax during 2007, compared to the year before when the airline suffered €7.4 million in losses.
The figures were announced by CY Executive Chairman Kikis Lazarides ahead of the company’s 61st Annual General Conference.
The company’s return to profits has led to hopes that under certain conditions, it could secure its viability and continue to make profits, Lazarides said.
“We have won a difficult battle, but not the war,” he pointed out, adding that “we should remain reserved and not walk on air”.
Lazarides underlined the difficult conditions in which CY was trying to operate: tough competition and the continuous increase in oil prices.
“The cost of oil for Cyprus Airways in 2007 reached around €68 million, which makes up 24 per cent of its operational costs and is the company’s highest expenditure,” he explained. And for 2008, it was initially estimated that oil alone will set the company back €82 million (27 per cent of its operational costs). However, latest developments in the oil market have increased this to €106 million – or 33 per cent of its outgoings.
If the price of oil was to continue increasing, he said, this would lead to inevitable increases in air fares.
“Unfortunately, the company does not have the ability to increase its fares without taking the competition into consideration,” Lazarides explained, adding that CY would take on part of the oil price increases, which would inevitably have a negative effect on its profits.
There were still problems that needed to be overcome, Lazarides added, which if left unresolved, could lead to disaster.
As a prime example, he spoke of competition among the company’s five unions, which disrupts the working peace.
“We must all realise that only with dialogue and good will can problems be solved and demands met, always within the framework of the company’s financial abilities,” said Lazarides. “From the moment that financial sources are restricted or the treasury is under, it would be irresponsible on our part to satisfy demands, which increase the costs and undermine the prospect of viability.”
He called on the unions to realise that without positive financial results, the company could not satisfy its staff’s long-term needs.
The CY Chairman said there were a number of measures and initiatives that continued to assist the company in going forward, such as the successful implementation of the e-ticket and introduction of the electronic check-in.
He added that from May 29 this year, CY had been included on the list of airline companies that have secured the IOSA safety certificate by the International Air Transport Association (IATA).
Regarding the company’s joint venture with Swissport, Lazarides said this agreement opened the way to more prospects, such as the recent agreement with company Menzies for the land service staff in Heathrow London. This, he explained, would save the company €1.5 million a year.
Now the company was planning to organise a joint venture for the catering services. “It is our strong conviction that this added redeeming measure will contribute to the further drastic reduction of the company’s operational costs, while at the same time opening the prospect of expanding its working circle and quality of produce with positive consequences on the general way in which the company operates,” said Savvides.
CYPRUS Airways is considering a partial renewal of its ageing fleet with more energy-efficient aircraft to cut down on a growing fuel bill, it said yesterday.
The national carrier did not go into details on what it could acquire, but said it hoped to have a part-renewed fleet by the start of the summer season in 2009. It underwent a costly part renewal in 2002 and 2003, blamed by detractors at the time for pushing the carrier into financial difficulties.
“We are looking at the possibility of a part renewal of our aircraft in some depth. We expect to have a partly renewed fleet by the next summer season,” chairman Kikis Lazarides told a news conference.
Cyprus Airways has a fleet of 11 aircraft, all Airbus, with an average age of 12.5 years.
“It is well known that some of our aircraft are somewhat tired and need to be renewed … the older the plane, the more fuel they require and the increase in the cost of fuel is an additional incentive pushing us towards this option,” Lazarides said.
A spate of airline bankrupties meant that there was also more availability of aircraft on the market, he said.
By Jacqueline Theodoulou(Cyprus Mail 2008)