SIXTY-EIGHT years of history were wiped out on Friday when the European Commission issued its decision about Cyprus Airways. As had been widely expected, the Commission deemed that part of the funds in excess of €100 million paid to the airline by the state in the form of assistance and through the issue of new capital was in fact a subsidy – €66 million of it had to be paid back. Unable to do so, there was only one choice left to the company – closing down.

Although older than the Cyprus Republic, the national carrier had become a symbol and flagship of the new state when the former was established. Its main shareholder was BEA (British European Airlines), but on independence the Republic took control of the majority stake. By 1991, when British Airways gave up its shares, the state controlled 80 per cent of the shareholding with the rest distributed among individuals. Despite the foreign participation, the national carrier had been run by successive governments and their placemen ever since independence, which is why it has closed down.

In fact the company has followed a very similar path to the state on its way to bankruptcy. It was subject to self-serving decisions by board members, incompetently run by unqualified party-men and sucked dry by the unions with the blessing of the politicians who had turned it into a dumping ground for unemployable party members; there was a time, not too many years ago, when it employed in excess of 2,000 staff on wages and benefits that profitable airlines did not pay. Its payroll, like the state’s, was unsustainable but even after the airline was bailed out by the taxpayer the wage cuts were too small, while the overpaid pilots took the company to court for cutting their princely salaries and won.

There was no troika to impose the painful cuts that could have increased the chances of survival when the airline was bailed out by the taxpayer in 2012. The Christofias government’s action plan at the time included pay rises for the lowest paid of the airline’s workers! By then, it may have already been too late to save the airline after so many years of mismanagement and waste. Tens of millions were lost on ill-advised aircraft purchases, like the Airbus 330, the setting up of Hellas Jet and operation of Eurocypria, not to mention the regular early retirement schemes with ultra-generous compensation packages.

It could not have been any other way at a company that was run by politicians and unions. Business principles were anathema to them as the former tried to maximise votes (and invisible benefits) and the latter the income of their pampered members who were accustomed to wages that were the envy of the rest of working population. The benefits they squeezed out of the company over the years were absurd, but the politicians never said ‘no’ to them. One chairman agreed to annual pay rises of four per cent when the airline was recording millions in annual losses.

And now, the 550 workers that were still employed by the company will join the ranks of the jobless. Some were protesting outside the company HQ on Friday night claiming that the government wanted the company to close down. The truth was that the company was beyond saving. The European Commissioner for Competition said in a statement on Friday: “Cyprus Airways has received large quantities of public money since 2007 but was unable to restructure and become viable without continued state support… injecting additional public money would only have prolonged the struggle without achieving a turn-around.”

Cyprus Airways was doomed because it was never run like a business and the main reason of its existence was to serve the interests of the political party establishment, its directors and its underworked, overpaid employees. Never in its history was there an ethos of customer service or a policy of building customer loyalty, because the paying passengers were always an afterthought. How could it have survived after the introduction of the open skies and the arrival of competition when it could no longer use its monopolistic power to charge high fares and offer poor service.

It never adapted to the competitive environment it found itself in after 2004. The workers were not willing to give up their ‘conquests’, the politicians were happy to carry on wasting the taxpayer’s money so as not to anger the unions and successive boards did nothing, obeying the orders of the government. Such reckless irresponsibility and incompetence could only have ended in bankruptcy.





