Reuters/Nicosia/Brussels


Cyprus closed down its flag carrier Cyprus Airways yesterday after the European Commission

ordered the struggling airline to pay back over €65mn in illegal state aid.
EU Competition Commissioner Margrethe Vestager said Cyprus Airways had no chance of

becoming viable without continued state subsidies, meaning the money paid out in 2012 and

2013 as part of a €103mn ($122mn) restructuring package would have to be recovered by the

government.
In 2013, Cyprus was forced to take a €10bn bailout from the European Union and

International Monetary Fund.
In Nicosia, authorities said the Cyprus Airways decision meant a suspension of operations.
“The company has ceased being a viable entity, and cannot continue to operate,” Finance

Minister Harris Georgiades told reporters.
Asked when the company would cease flights, he said: “From tomorrow there will be

alternative arrangements.”
An administrator would be appointed and it was expected its air licence certificate would

be revoked, he said.
Under EU rules a company can only receive state assistance once every 10 years. Cyprus

Airways, which recently resorted to selling assets such as its slot at London Heathrow to

stay afloat, had previously received financial assistance in 2007.
The Commission opened an investigation into the aid in March 2013, and the state-owned

airline has 10 years to pay back the money.
The Commission said Cyprus had provided no evidence that the airline faced “exceptional

and unforeseeable” circumstances that would justify additional aid after the 2007 rescue

package.
“Cyprus Airways has received large quantities of public money since 2007 but was unable to

restructure and become viable without continued state support ... injecting additional

public money would only have prolonged the struggle without achieving a turn-around,”

Vestager said in the statement.
In addition, EU law requires that the company receiving restructuring aid contributes at

least 50% to the cost.
“The Commission found that Cyprus Airways’ own contribution is significantly below the

level of 50% required by the guidelines,” it said.
Attempts to sell Cyprus Airways flopped last year. European low-budget airline Ryanair and

Greece’s Aegean Airlines had expressed some preliminary interest but it was not followed

up with anything firmer.
Both Ryanair and Aegean, which have taken market share away from Cyprus Airways, have

submitted applications to Cypriot authorities seeking an air operator certificate, which

would allow them to create subsidiaries on the island.