Roundup: Cyprus Airways closes down after EU ruling on state assistance

Cypriot national air carrier Cyprus Airways was closed down following a European Commission ruling on Friday that it had illegally received state aid.

Ministers of Finance Harris Georgiades and Communications Marios Demetriades said at a joint press conference that the license of the government-owned company has been revoked and its flying program terminated with immediate effect.

The company's last flight from Athens landed at Larnaca Airport shortly after 9 p.m. local time (2000 GMT).

Georgiades said that an administrator will be appointed for the liquidation of the company.

Demetriades said plans have been made to safeguard that the island country will be connected by air with the rest of the world.

Alternative arrangements were announced for passengers who had reserved seats on Cyprus Airways flights.

"These alternative arrangements ... will possibly include the use of chartered airplanes, the transportation of passengers with another airline to his/her destination ... or any combination of the above," a statement said.

Demetriades said that the government will push ahead without any delay for the establishment of a new air carrier in association with the private sector.

"It will carry the logo and the name of Cyprus Airways," he said.

Current staff members will be offered jobs in the new company but it is expected that salaries will be cut down.

Cyprus Airways pilots were among the best paid in the world.

The decision to immediately shut down the Cypriot national air carrier, which was established in 1947, came after the European Commission announced that Cyprus Airways would have to pay back about 103 million euros (122 million U.S. dollars) in state aid it has received since 2007.

Competition Commissioner Margrethe Vestager said Cyprus Airways needs to pay back all incompatible aid received, with 66 million euros being recoverable immediately.

The Commissioner ruled that the state aid gave the company an undue advantage over its competitors in breach of EU rules.

The Commission also found that Cyprus Airways "had no realistic perspective of becoming viable without continued state subsidies" and that injecting more money into the company would not achieve a turn-around.

Former Cypriot left wing president Demetris Christofias said after a meeting with his successor Nicos Anastasiades on an issue unrelated to Cyprus Airways that he knowingly gave state assistance to the company to keep it in the air.

"Problems for the company were caused by bad decisions of other governments," he said.

Government spokesman Nicos Christodoulides had said earlier that the government had made provision for the company's 500-strong staff.

The state will pay them compensation totaling 5 million euros and will also fund their pension fund.

Several staff members gathered outside Cyprus Airways headquarters protesting at its closure as the Board met inside the building to plan its winding down.

Cyprus Stock Exchange had announced that it decided to delist the company's shares as of Jan. 13 after it failed to submit preliminary financial statements from 2012 onwards.

Efforts by the government last year to sell Cyprus Airways either to low-cost airline Ryanair or Greece's Aegean Airlines failed as they did not follow their initial expression of interest with firm offers. Endit