Larnaca Airport

Changes ahead for Cyprus Airways as it implements turnaround plan and seeks new owner

Cyprus Airways is facing intensifying competition in its local market while it contends with falling revenue and rising expenses. A turnaround plan is underway to streamline the airline’s operations in attempt to strengthen the carrier prior to raising new capital and a potential sale to a strategic investor. All the while low-cost carriers are growing in influence in the key Cyprus-Europe market.

In 2011 Cyprus Airways’ revenues were down 10.1% to EUR212.4 million while operating costs grew 1.9% to EUR264.7 million, primarily from rising fuel prices. The negative result was attributed to the ongoing economic downturn along with “intensifying competition in the main markets” where the airline operates. The flag carrier expects to be impacted further by Greece’s financial crisis while unrest in the Middle East is expected to continue to create uncertainty.

Europe's fringe carriers look for partners to overcome financial crisis; Cyprus Airways latest

Airlines on Europe's southern and eastern periphery are becoming more precariously positioned, but are looking for for partners to help overcome the growing financial crisis. Cyprus Airways is the latest such carrier, and reported a widening in first half losses in the six months to 30-Jun-2011, as lower top-line revenue fell and higher fuel costs squeezed the airline in the period. Cyprus Airways is also turning to implementing a raft of measures aimed at stemming operating losses.

Aegean narrows 1H loss despite difficult conditions

Aegean Airlines, Greece’s largest airline by passenger numbers, narrowed losses in 1H2011 (six months to 30-Jun-2011) despite myriad trading difficulties across Europe and sharp fuel price rises. While economic problems have been much more acute in Greece than elsewhere, Aegean Airlines has turned the business around following cost reductions and a network overhaul, leaving it less exposed to the Greek market.

Ryanair goes medium haul. Is a Middle East hub the goal as it pushes the limits?

The announcement last week from Ryanair that it intends to include Larnaca, Cyprus in its list of destinations raises some interesting questions. Not least amongst them is, just how far can LCCs travel using the business model that is in place now? So far Ryanair has shied away from long haul (transatlantic) operations, which its management knows would require a significant adjustment to the short/mid haul model, though it still insists it will do it one day. It seems Ryanair (or Michael O’Leary) has spoken to airport management in the U.S., for example Niagara Falls airport, about hosting the first route. Now it appears though that Ryanair may be looking at tapping into the Middle East market, by using Larnaca as a base.