A Cyprus Airways deal with Qatar Air for the sale of the troubled national carrier’s time slot at London’s Heathrow airport for €15 million has fallen through, official sources said yesterday.
“It seems that publicising the numbers before the deal had been finalised was a big mistake. There are too many carriers in trouble these days, Qatar probably got a better offer,” an inside source said.
“Cyprus Airways must now go back to negotiating a new deal with a new potential buyer,” added the source.
Selling the time slot at Heathrow Airport – one of two owed by CA – could hold the company until the key summer period.
Last week, the two sides’ legal advisers were in the process of drafting the agreement as the national carrier’s pilots had voiced opposition to the sale.
Pilots had argued that flights to London are an important source of income for the airline and link Cyprus with the large Cypriot expatriate community.
As if the slot failure were not bad enough, low-budget Ryanair has announced its summer 2014 schedule which includes a new route to Athens operating on a daily basis as of April. More importantly, fares start from as low as only €12 one-way.
This means that CA’s competition for the most popular destination for Cypriots will be very tough to match.
The once spend-free carrier has to minimise operational costs to the maximum possible by axing whatever is beyond its means.
An informed source said earlier this week: “Cyprus Airways has to make itself a low operational cost carrier to attract prospective buyers”.
And this means that staff will continue to be axed and departments will continue to be outsourced by the ailing company.
Nonetheless, the European Commission has thrown a lifeline at CA by postponing a decision on its investigation over the legality of the carrier’s increase of capital by €31.3 million. But the danger of the carrier closing down is still there.
If Brussels decides against Cyprus Airways then the carrier may have to shut down, because money it doesn’t have must be returned.
Communications Minister Tasos Mitsopoulos has already warned that the Commission’s decision could be negative. And the state would still not be able to pay back all that money but the delay gives more time to CA to find a strategic investor.