ECONOMY

Cyprus Airways shuts down after EU ruling

Cyprus closed down its flag carrier Cyprus Airways on Friday after the European Commission ordered the struggling airline to pay back over 65 million euros in illegal state aid.

EU Competition Commissioner Margrethe Vestager said Cyprus Air had no chance of becoming viable without continued state subsidies, meaning the money paid out in 2012 and 2013 as part of a 103-million-euro restructuring package would have to be recovered by the government.

In Nicosia, authorities said the 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 [Saturday] there will be alternative arrangements.”

An administrator would be appointed and it was expected its air license 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.