Cyprus Airways chose the middle ground Friday, February 16, between rivals Airbus and Boeing in a mixed purchase-lease deal to renew its fleet by acquiring four new aircraft from each company at a net cost of $55 million, officials said.
”The decision was based on the technical and financial findings of a study explaining that this combination was the best for the airline's viability," Cyprus Airways chairman Haris Loizides told reporters.
The decision ended months of heated speculation over which company would snatch the deal to replace the airline's dozen Airbus aircraft after a yearlong game of one-upmanship played through the media by the two rivals.
The airline will purchase from Airbus two 124-seat A319-100 aircraft for short-haul flights and lease two 253-seat, A330-200s to service longer routes with delivery set for the first half of 2002 and 2003 respectively.
Dismissing suggestions that political pressure played a role in the decision to purchase the Airbus aircraft, Loizides said the European consortium simply offered a better discount on the deal.
US and European diplomats had paid visits to top Cypriot politicians in recent weeks, fueling rumors they were trying to tip the political scales in favor of either company.
Cyprus is on a drive for EU accession by 2003, while US diplomacy is seen as crucial to resolving the decades-old division of the island between Greek and Turkish sectors.
The airline, in which the government holds a controlling stake, is also in a bid to acquire 30 percent of ailing Olympic Airways, which is being sold off by the Greek government.
Cyprus Airways will lease from Boeing four 189-seat 737-800 aircraft for its charter unit Eurocypria Airlines, with delivery set for 2003.
Loizides said the 737-800 was chosen for Eurocypria because it can carry 15 more passengers than the Airbus A320 aircraft currently flying with the charter unit's colors, generating some four million dollars in added revenue annually.
"Local charter competitors fly the 737-800 and by choosing this aircraft, Eurocypria becomes more competitive," Loizides said. Eurocypria's two A320 aircraft will revert back to Cyprus Airways.
Loizides said the airline is still negotiating how long it will lease the Airbus and Boeing aircraft, but would not disclose the exact terms of the deal due a secrecy clause in the contracts with the two aircraft manufacturers.
"Leasing means flexibility for the airline because in either three, or five years you can change the aircraft if they don't service your needs," he said.
He added that the airline will cover the cost of the deal by pitching in the approximately $50 million it will get by 2003 from the sale of four of its A310-200 aircraft and another $37 million in cash raised in the stock market from the share issue.
Loizides said the relatively low cost of the deal will allow the airline to seek a "very small" loan of about $22 million. — (AFP, Nicosia)
by Mano Hadjicostis
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
