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I Information

Commission

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Euro exchange rates (1)

12 May 2006

(2006/C 113/01)

1 euro= 

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(1)

Source: reference exchange rate published by the ECB.

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STATE AID — CYPRUS

State aid No C 10/2006 (ex N 555/2005) — Cyprus Airways Restructuring plan

Invitation to submit comments pursuant to Article 88(2) of the EC Treaty

(2006/C 113/02)

(Text with EEA relevance)

By means of the letter dated 22 March 2006 reproduced in the authentic language on the pages following this summary, the Commission notified Cyprus of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty concerning the abovementioned State aid.

Interested parties may submit their comments on the measure in respect of which the Commission is initiating the procedure within one month of the date of publication of this summary and the following letter, to:

These comments will be communicated to Cyprus. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY

Procedure

By undated letter registered by the Commission on 9 November 2005 (DG TREN A/28405) and in accordance with Article 88(3) of the EC Treaty and of their undertaking given in the context of the rescue aid (N69/2005) for Cyprus Airways authorised by the Commission on 3 May 2005 (Decision (2005)1322), the Cypriot authorities notified the European Commission of a restructuring plan for Cyprus Airways Ltd. On 18 November 2005 (D(05)125084) the Commission asked the Cypriot authorities for additional clarifying information. The Cypriot authorities answered the Commission's questions by letter dated 23 January 2006, registered on 24 January 2006 (under reference DG TREN A/11819).

Decription of the measure

Cyprus Airways, established in 1947 has as its principal activities the transportation by air of passengers and cargo and other airline related services. The main shareholder of the company is the Cyprus government (69,62 %) while the balance of the shares is held by some 4 200 small private investors. Cyprus Airways currently operates a fleet of 11 aircraft, providing scheduled services in Europe and the Middle East to 26 destinations (1). In 2004 it transported 1 772 552 passengers over 3 427 million passenger kilometres.

The restructuring plan as notified is made up of a number of separate but complementary elements designed to restore the long-term viability of the company. These include;

A long-term loan of CYP 55 million (EUR 96 million)

This loan on commercial terms with a guarantee from the Cyprus government will be for a ten year period, and will in the first case be used to repay the short-term loan of CYP 30 million (EUR 51 million) made following the rescue aid approval in May 2005. Thereafter the balance will be used to restructure the airline.

Sale of Eurocypria

The charter subsidiary of Cyprus Airways will be sold to the government at a price that will be determined by an independent expert. The price has been initially estimated at CYP 15 million (EUR 26 million). As a consequence Eurocypria will be separated from the Cyprus Airways group and operated as a completely distinct entity. It also means that the proceeds of the sale (paid by the government to Cyprus Airways) can be used by the latter to fund its restructuring.

It is foreseen that the restructuring loan (and the Eurocypria sales proceeds) will be spent as follows:

Cost cutting

In the first 24 months of the restructuring plan the main focus will be on cost cutting and selected revenue enhancement. The government and management have estimated that total costs need to be reduced by 13 %. This will be achieved by cutting staff numbers by some 20 % and at the same time reducing salary levels for those staff remaining with the company by an average of 15 %. This means that of a staff of 1 840 as of 1 September 2005, 385 will be made redundant under the restructuring plan; these redundancies will lead to annual savings of approximately CYP 7 million (EUR 12 million) A further economy of some CYP 4,6 million (EUR 8 million) will be cut from ongoing staff costs.

Capital increase

A further part of the restructuring plan, intended to take place 18 months after the plan has been initiated is a capital increase of CYP 14 million (EUR 24 million). It is expected in this all shareholders (the State as well as the smaller principally individual shareholders) will participate in proportion to their shareholding. The State will put up CYP 9.8 million (EUR 17 million) while the private shareholders' contribution in this capital increase will be around CYP 4,2 million (EUR 7,3 million).

Assessment of the measure

The Commission finds that the restructuring plan confers an advantage from State resources (a loan guarantee from the State) on a particular operator — Cyprus Airways. This advantage affects trade between Member States and that it distorts or threatens to distort competition. Additionally the Commission cannot exclude at this stage that other aspects of the plan (the sale of Eurocypria, the planned capital increase) do not involve State aid. Therefore the Commission finds that the restructuring plan contains elements constituting aid according to Article 87(1) of the EC Treaty.

The Commission must therefore decide if the plan is compatible with the applicable community framework, the Community guidelines for the State aid for the Rescue and Restructuring of Firms in Difficulty of 2004 (2).

Having examined the plan the Commission has doubts regarding certain aspects thereof.

The Commission has doubts regarding the sale of Eurocypria to the State and how the sales price has been arrived at. If the price paid for Eurocypria is not a market price then this sum would have to be regarded as state aid.

The Commission also has doubts regarding the capital increase scheduled to take place 18 months after the restructuring plan has begun, the Commission would like to understand what criteria and parameters will be considered in deciding that this capital increase will go ahead, it cannot at this stage exclude that the state participation this capital increase could amount to State aid

The Commission doubts if the plan will restore the long-term viability of the company in the shortest possible time and without need for additional aid in the future. The plan is based on heavy cost cutting and a repositioning of the airline in its market. The plan envisages a long-term loan to be paid off over 10 years. The Commission does have not enough information to be able to say if the financial projections are reasonable, if the assumptions on which these are based are valid and if the airline will be restored to viability.

The Commission doubts if the compensatory measures proposed are sufficient to remedy the market distortion of the aid. The plan envisages that Cyprus Airways will retain the same fleet and the same route network after the restructuring as before. It will however sell off its charter arm Eurocypria (4 aircraft). Additionally another subsidiary HellasJet will be closed down and its three aircraft released. The Commission has doubts as to whether the compensatory measures proposed by Cyprus are sufficient, in particular as Eurocypria is being sold to Cyprus Airway's principal shareholder. The Commission would be particularly interested in having the opinion of CY's competitors in this regard.

The Commission also has doubts on whether the amount of the aid element of the restructuring plan has been kept to a minimum (as required by the guidelines), bearing in mind that it has not yet decided if either the Eurocypria sales proceeds or the planned capital increase constitute State aid.

Normally with a company of the size of Cyprus Airways the level of own contribution to the restructuring costs should be in the order of 50 %. Cyprus Airways will contribute CYP 7 million (EUR 12 million) in cash to the plan, to this the Cypriot authorities insist should be added the sum of CYP 15 million of sale proceeds from Eurocypria as well as the CYP 4,2 million of private shareholder capital from the recapitalisation scheduled to take place 18 months after the restructuring begins. The Commission has doubts regarding this level of own contribution and whether the Eurocypria sales proceeds and capital increase by the State shareholder may not amount to State aid.

In view of the above, the Commission has doubts whether the notified restructuring plan is in accordance with the provisions of the applicable rescue and restructuring guidelines. That is why the Commission has decided to initiate the formal investigation procedure pursuant to Article 4(4) of Regulation (EC) No 659/1999. The Commission will close the procedure by issuing a final Decision.

In the light of the foregoing considerations, the Commission, acting under the procedure laid down in Article 88(2) of the EC Treaty, requests the Republic of Cyprus to submit its comments and to provide all such information as may help to assess the aid.

In these circumstances, the Commission considers that, in the interest of all parties concerned, they should be invited to submit their comments in the context of the formal investigation procedure pursuant to Article 88(2) of the EC Treaty.

TEXT OF LETTER

‘Η Επιτροπή επιθυμεί να πληροφορήσει την Κυπριακή Δημοκρατία ότι, αφού εξέτασε τις πληροφορίες που έδωσαν οι αρχές της χώρας σχετικά με το προαναφερόμενο μέτρο, αποφάσισε να κινήσει τη διαδικασία που προβλέπεται στο άρθρο 88 παράγραφος 2 της συνθήκης ΕΚ.

I.   ΔΙΑΔΙΚΑΣΙΑ

II.   ΤΟ ΓΕΝΙΚΟ ΠΛΑΙΣΙΟ ΤΗΣ CYPRUS AIRWAYS

Eurocypria Airlines

Zenon National Distribution Centre Ltd.

Hellas Jet S.A.

Cyprair Tours

Cyprus Airways (Duty Free Shops) Ltd.

Η χρηματοοικονομική κατάσταση

Εκπόνηση σχεδίου αναδιάρθρωσης

III.   ΛΕΠΤΟΜΕΡΗΣ ΠΕΡΙΓΡΑΦΗ ΤΩΝ ΠΡΟΤΕΙΝΟΜΕΝΩΝ ΜΕΤΡΩΝ ΕΝΙΣΧΥΣΗΣ

Μακροπρόθεσμο δάνειο 55 εκατ. CYP (95,8 εκατ. ευρώ)

Πώληση της Eurocypria

Περικοπές κόστους

Στρατηγικές παραγωγής εσόδων

Μεταβίβαση του τμήματος τροφοδοσίας (catering)

Αύξηση του κεφαλαίου

Αξιολόγηση του μέτρου

Ύπαρξη ενίσχυσης κατά την έννοια του άρθρου 87 παράγραφος 1 της συνθήκης ΕΚ

Νομική βάση της αξιολόγησης

Συμβιβάσιμος χαρακτήρας των προτεινόμενων μέτρων με την κοινή αγορά

Επιλεξιμότητα της επιχείρησης

Αποκατάσταση της μακροπρόθεσμης βιωσιμότητας

Αντισταθμιστικά μέτρα

Η ενίσχυση πρέπει να περιορίζεται στο ελάχιστο

Επίπεδο της ιδίας συμβολής

IV.   ΑΠΟΦΑΣΗ

Βάσει των ανωτέρω, η Επιτροπή, ενεργώντας σύμφωνα με τη διαδικασία που προβλέπεται στο άρθρο 88 παράγραφος 2 της συνθήκης ΕΚ, ζητεί από την Κυπριακή Δημοκρατία να υποβάλει τις παρατηρήσεις της και να της παράσχει όλες τις πληροφορίες εκείνες που θα ήταν χρήσιμες για την αξιολόγηση του προτεινόμενου σχεδίου αναδιάρθρωσης, εντός ενός μηνός από την ημερομηνία παραλαβής της παρούσας επιστολής. Ζητεί από τις αρχές της χώρας σας να διαβιβάσουν άμεσα αντίγραφο της παρούσας επιστολής στον δυνητικό αποδέκτη της ενίσχυσης.

Η Επιτροπή επιθυμεί να υπενθυμίσει στην Κυπριακή Δημοκρατία ότι το άρθρο 88 παράγραφος 3 της συνθήκης ΕΚ έχει ανασταλτικό αποτέλεσμα, και εφιστά την προσοχή σας στο άρθρο 14 του κανονισμού (ΕΚ) αριθ. 659/1999 του Συμβουλίου, το οποίο προβλέπει την δυνατότητα ανάκτησης από το δικαιούχο κάθε παράνομης ενίσχυσης.

Η Επιτροπή προειδοποιεί την Κυπριακή Δημοκρατία ότι θα ενημερώσει όλα τα ενδιαφερόμενα μέρη με δημοσίευση της παρούσας επιστολής και περίληψής της στην Επίσημη Εφημερίδα της Ευρωπαϊκής Ένωσης. Θα ενημερώσει επίσης τα ενδιαφερόμενα μέρη στις χώρες ΕΖΕΣ που έχουν υπογράψει την συμφωνία για τον ΕΟΧ, με δημοσίευση σχετικής ανακοίνωσης στο συμπλήρωμα ΕΟΧ της Επίσημης Εφημερίδας της Ευρωπαϊκής Ένωσης, καθώς και την εποπτεύουσα αρχή της ΕΖΕΣ με αποστολή αντιγράφου της παρούσας επιστολής. Όλοι οι ανωτέρω ενδιαφερόμενοι θα κληθούν να υποβάλουν τις παρατηρήσεις τους εντός ενός μηνός από την ημερομηνία της σχετικής δημοσίευσης.’

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(1)  Athens, London (Heathrow and Stansted), Amsterdam, Brussels, Frankfurt, Moscow, Paris, Zurich, Vienna, Birmingham, Manchester, Milan, Rome, Thessaloniki, Heraklion, Cairo, Tel-Aviv, Beirut, Damascus, Amman, Jeddah, Bahrain, Dubai and Riyadh.

(2)OJ C 244 1.10.2004, p. 2.

(3)  Αθήνα, Λονδίνο (Heathrow και Stansted), Άμστερνταμ, Βρυξέλλες, Φρανκφούρτη, Μόσχα, Παρίσι, Ζυρίχη, Βιέννη, Birmingham, Manchester, Μιλάνο, Ρώμη, Θεσσαλονίκη, Ηράκλειο, Κάιρο, Τελ-Αβίβ, Βηρυτός, Δαμασκός, Αμάν, Jeddah, Bahrain, Dubai και Riyadh

(4)  Συμπεριλαμβανομένων των επιβατών που ταξιδεύουν δωρεάν, των επιβατών σε ναυλωμένες και τακτικές πτήσεις.

(5)  Αεροσκάφος και πλήρωμα.

(6)  2003: ζημία 6,4 εκατ. CYP, 2004: ζημία 10,2 εκατ. CYP + απαξίωση 7,6 εκατ. CYP.

(7)ΕΕ C 244 της 1.10.2004, σ. 2.

(8)  Το ποσό αυτό περιλαμβάνει τις δαπάνες για την απομάκρυνση του πλεονάζοντος προσωπικού συν πρόβλεψη επιπλέον 2,5 εκατ. CYP.

(9)   Επιχερηματικο απόρρητο.

(10)  Εφαρμογή των άρθρων 93 και 93 της συνθήκης ΕΚ και του άρθρου 61 της συμφωνίας για τον ΕΟΧ στις κρατικές ενισχύσεις στον τομέα των αεροπορικών μεταφορών (ΕΕ C 350 της 10.12.1994, σ. 5).

(11)  Το ποσό αυτό αποτελείται από 7 εκατ. CYP ιδίας συμβολής, 15 εκατ. CYP έσοδα από την πώληση της Eurocypria και 4,2 εκατ. CYP από ιδιώτες μετόχους.

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Commission communication in the framework of the implementation of Directive 94/25/EC of the European Parliament and of the Council of 16 June 1994 on the approximation of the laws, regulations and administrative provisions of the Member States relating to recreational craft

(2006/C 113/03)

(Text with EEA relevance)

(Publication of titles and references of harmonised standards under the directive)

NOTE:

More information about harmonised standards on the Internet at:

http://europa.eu.int/comm/enterprise/newapproach/standardization/harmstds/

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(1)  ESO: European Standardisation Organisation:

(2)OJ L 204, 21.7.1998, p. 37.

(3)OJ L 217, 5.8.1998, p. 18.

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Prior notification of a concentration

(Case COMP/M.4167 — Mitsui/Vopak)

Candidate case for simplified procedure

(2006/C 113/04)

(Text with EEA relevance)

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(1)OJ L 24, 29.1.2004, p. 1.

(2)OJ C 56, 5.3.2005, p. 32.

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Prior notification of a concentration

(Case COMP/M.4219 — ABN Amro/Nextiraone Europe)

Candidate case for simplified procedure

(2006/C 113/05)

(Text with EEA relevance)

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(1)OJ L 24, 29.1.2004, p. 1.

(2)OJ C 56, 5.3.2005, p. 32.

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Non-opposition to a notified concentration

(Case COMP/M.4133 — Mellon/WestlB/JV)

(2006/C 113/06)

(Text with EEA relevance)

On 30 March 2006, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

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III Notices

Commission

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I-Rome: operation of scheduled air services

Invitation to tender published by Italy, pursuant to Article 4(1)(d) of Council Regulation (EEC) No 2408/92, for the operation of scheduled air services between Pantelleria and Trapani and vice versa

(2006/C 113/07)

1.   Introduction: Pursuant to Article 4(1)(a) of Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes, in accordance with the decisions taken at the Interdepartmental Conference chaired by the Region of Sicily, the Italian Government — Ministry of Infrastructure and Transport has decided to impose public service obligations on scheduled air services between:

Pantelleria—Trapani and vice versa.

The terms of these public service obligations were published in the Official Journal of the European Union C 112 of 12.5.2006.

If, within 30 days of publication of the abovementioned obligations, no air carrier has commenced or is about to commence scheduled air services on the abovementioned route in accordance with the public service obligations imposed and without requesting financial compensation, the Government has decided, in accordance with the procedure laid down in Article 4(1)(d) of the abovementioned Regulation, to limit access to that route to a single air carrier, on the basis of a specific invitation to tender for the provision of the air service in question in accordance with the provisions of Council Regulation (EEC) No 2408/92.

The right to operate the service on the route in question will be granted by means of public tender on the basis of the most economically advantageous bid taking into account the amount of financial compensation indicated in the tender dossier referred to in Section 5 of this invitation to tender.

2.   Subject of the invitation to tender: The operation of scheduled air services on the abovementioned route in accordance with the public service obligations published in Official Journal of the European Union C 112 of 12.5.2006, in accordance with the provisions of Regulation (EEC) No 2408/92.

3.   Participation: The invitation to tender is open to all air carriers holding a valid operating licence issued by a Member State in accordance with Council Regulation (EEC) No 2407/92 of 23 July 1992 which have the technical requisites specified in the public service obligations published in Official Journal of the European Union C 112 of 12.5.2006.

4.   Procedure: This invitation to tender is subject to the provisions of Article 4(1)(d), (e), (f), (h) and (i) of Council Regulation (EEC) No 2408/92.

5.   Tender dossier: The complete tender dossier contains the specific standards applicable to the invitation to tender and indicates the maximum amount that may be granted by way of the financial compensation to be taken into consideration as the basis for the tendering procedure, as well as other relevant information. It constitutes, in all respects, an integral part of this invitation to tender, and can be requested, free of charge, from the following address:

ENAC, Direzione Trasporto Aereo, Viale del Castro Pretorio 118, I-00185 Rome.

6.   Service agreement: The service will be governed by an agreement based on a model which forms part of the tender dossier.

7.   Financial compensation: Tenders must explicitly indicate, with an annual breakdown, within the limit referred to in Section 5, the maximum amount of compensation requested for operating the service in question for 2 years from the scheduled starting date for the service, with the possibility of an extension for a further 12 months.

The exact amount of the compensation granted will be determined retrospectively each year on the basis of the costs actually incurred and the revenue actually generated by the service, on presentation of supporting documents and within the limit of the amount indicated in the tender, as specified in the tender dossier.

In no event may the carrier request, by way of financial compensation, an amount in excess of the upper limit specified in the agreement, given the nature of the payment which does not constitute a consideration but compensation for providing a service which is subject to public service obligations.

The annual payments will be made in the form of instalments and a final balance. The balance will be paid only after approval of the carrier's accounts for the route in question and verification that the service has been operated in accordance with the conditions laid down in Sections 10 and 11.

8.   Fares: Tenders must indicate the proposed fare structure in accordance with the public service obligations published in Official Journal of the European Union C 112 of 12.5.2006.

9.   Duration of the agreement: The agreement will run for 2 years, with the possibility of an extension for a further 12 months, starting on the scheduled date on which the air services on the route in question are to commence operation in accordance with the public service obligations imposed.

The proper operation of the service and the carrier's cost accounting for the route in question will be the subject of an examination at least once a year at the request of the Administration, in cooperation with the carrier.

10.   Termination of agreement and notice: Either party may terminate the agreement before the end of its period of validity by giving 6 months' formal notice. If the carrier fails to comply with the public service obligations, it will be deemed to have terminated the agreement without notice if it does not resume the service in accordance with the public service obligations within 30 days of being served notice to comply fully with the obligations accepted.

11.   Non-fulfilment and penalties: Failure to operate the service for the following reasons shall not constitute non-fulfilment attributable to the carrier:

hazardous weather conditions,

closure of 1 of the airports,

public safety concerns,

industrial action,

security concerns, or

force majeure.

In such cases, the amount of compensation will be reduced in proportion to the number of flights not carried out.

The carrier is responsible for ensuring that the obligations accepted under the agreement are strictly adhered to. In the event of partial or total non-fulfilment for reasons other than force majeure or abnormal or unforeseeable events beyond the carrier's control, which the carrier could not reasonably avoid, in spite of all due diligence, the Italian authorities may withdraw the assignment of the route subject to formal notice being given to the carrier within 10 days of knowledge of the event.

After receiving formal notice, the carrier is allowed up to 7 days to justify itself.

The number of flights cancelled for reasons directly attributable to the carrier each year must not exceed 2 % of the number of flights scheduled, in other words 98 % of the flights scheduled must be carried out. The carrier must pay the regulatory body a penalty of EUR 3 000 for every flight cancelled in excess of this limit.

The carrier must guarantee that flights are operated to within 30 minutes of the established timetable (punctuality coefficient). For any delay in excess of 30 minutes, the carrier will give each passenger a credit of EUR 15 to be used in the purchase of a subsequent ticket.

The abovementioned rules shall not apply to cancelled flights and flights delayed due to weather conditions, industrial action or events beyond the responsibility and/or control of the carrier.

If the service is interrupted in any way, the amount of financial compensation shall be revised in proportion to the number of flights not carried out, without prejudice to any subsequent claim for compensation for damages.

Failure by the carrier to observe the period of notice referred to in Section 10 shall be subject to a penalty calculated on the basis of the number of days of default and the actual deficit for the route over the year in question. In no case shall the penalty be greater than the amount of financial compensation referred to in Section 7.

To ensure the continuity and regularity of flights, the carrier which accepts these public service obligations must provide a performance security with a view to guaranteeing the correct performance and continuation of the service. The security shall amount to at least EUR 800 000 and must be guaranteed by an insurance surety payable to ENAC (the Italian National Civil Aviation Authority), which may use it to ensure the continuation of the services concerned.

The security will be released if the examination referred to in the last paragraph of Section 9, carried out upon completion of the agreement, is favourable.

12.   Submission of tenders: Tenders, which in order to be valid must be drawn up in accordance with the provisions of the tender dossier, must reach the following address no later than 30 days after the date of publication of this invitation to tender in the Official Journal of the European Union in a closed and sealed envelope either by registered letter with acknowledgement of receipt or by hand delivery against receipt:

ENAC, direzione generale, viale del Castro Pretorio 118, I-00185 Roma.

13.   Validity of the invitation to tender: Pursuant to Article 4(1)(d) of Council Regulation (EEC) No 2408/92, the validity of this invitation to tender is subject to the condition that no Community air carrier agrees to operate the route in accordance with the public service obligations published in Official Journal of the European Union C 112 of 12.5.2006 within 30 days of its publication and without compensation.

14.   Contract award: The contract will be awarded by ENAC, the Italian National Civil Aviation Authority, which will appoint a committee for this purpose where necessary.

15.   Disputes: Any disputes between the parties arising from the application of the agreement or in any way relating to the performance of the service will be referred to the competent judicial authority after an attempt at conciliation to be carried out within 90 days of the dispute arising.

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