The European Commission on Tuesday opened in-depth investigations to see if state aid for struggling Cyprus Airways, as well as Estonia Air, complies with EU rules.
Cyprus Air is hanging on while being restructured with government funds of some 103 million euros.
The Commission said the probe will examine whether restructuring plans will return the airline to financial health without distorting competition too much in the meantime.
Brussels said it has doubts the restructuring plan will work and whether the airline “is capable of withstanding likely challenges in the air transport market during the next years... It is also uncertain whether the proposed capacity reduction through the cancellation of routes is sufficient to compensate for the distortions of competition created by the state support.”