Financial Troubles at Cyprus Airways
Cyprus Airways was the national carrier of the Republic of Cyprus. Established in 1947 and predominantly state-owned, the airline became known for being poorly managed and consistently losing money. The latest public money injection took place in December 2012 - January 2013, and amounted to €103 million of state funds – prompting soon afterwards an in-depth investigation by the European Commission. The Commission was not sure if the capital increase was made on market terms. Indeed, if the company faced severe financial problems and its viability was at stake, it would explain why the majority of private shareholders decided not to participate in the capital increase. Cyprus Airways published its latest audited financial results in 2011, and released some unaudited results for 2012. What was the airline’s financial situation, as revealed in those reports? What specific financial problems can be identified via the company’s financial statements? How did the airline’s situation look to a potential investor?