Last updated on April 26, 2015
Cyprus Airways has lost its operating license. According to officials, the European Union ruled that the airline illegally received tens of millions of Euros and that the 94 percent government-owned company must pay back more than $65 million Euros ($76.78 million US) out of the $103 million Euro ($121.67 million US) state package it received just over a year ago.
Harris Georgiades, Finance Minister and Communications Minister, Marios Demetriades, said that the money-losing airline will cease operations immediately and that an administrator will be appointed to finalize the closing of the company.
In a public statement Georgiades said, “With the European Commission’s decision, the company ceases to be a financially viable unit and will immediately lose its license.”
Passengers of Cyprus Airways will have their tickets covered by the government, who says they will cover the $6 to $7 million Euro cost of either reimbursing tickets or helping travelers make alternate travel plans.
Demetriades says that the demise of the nation’s airline won’t affect air links to east Mediterranean islands and adds that plans are already under way to create a new privately-backed company that will bear the current Cyrpus Air logo and name. Current Cyprus Airway staff have been told they will receive the salaries and pensions they’re entitled to.
Cyrpus Airways, which was founded in 1947, has suffered years of mismanagement and could no longer compete with low-cost carriers that won over a large percentage of their business.
While attempts were made to salvage the airline with restructuring, staff reductions, money injections and flight shrinkage to a fleet of six planes, it wasn’t enough. The EU ruling is to take effect immediately.