Cyprus Airways closed down after EU state aid ruling

[Tomer]

Cyprus has suspended operations at its flag carrier after the European Commission ordered the struggling airline to pay back over 65 million euros in illegal state aid.

The last Cyprus Airways flight will take place Friday night, government officials said.

EU Competition Commissioner Margrethe Vestager said Cyprus Airways had no chance of becoming viable without continued state subsidies, meaning money paid out in 2012 and 2013 as part of a restructuring package would have to be recovered. The restructuring plan was "based on unrealistic assumptions" the EU Commission said.

Under EU rules a company can only receive state assistance once every 10 years, and the airline had already been bailed out in 2007.

"The company has ceased being a viable entity ... and cannot continue to operate," Finance Minister Harris Georgiades told reporters. He said the state would fully cover the cost of alternative flights for passengers who had already booked with the airline.

Cyprus Airways, 93 percent owned by the state and which employs 550 people, has a 10 percent share of flights to the island, down from 30 percent two years ago.

Ryanair, which announced dozens of new routes within hours of the collapse of Hungary's Malev in 2012, said in a statement that it was temporarily cutting prices to the Mediterranean island to help stranded passengers.

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Source: http://www.reuters.com/article/2015/01/09/eu-subsidies-cyprus-airways-idUSL6N0UO2UN20150109