NICOSIA (Reuters) – Cyprus Airways is considering staff redundancies to pull it out of the red, the chairman of the troubled national airline said yesterday. Layoffs are unprecedented in the history of the airline, which employs a highly unionized staff of 2,000. But Chairman Constantinos Loizides told shareholders the «painful» option was to sack a number of staff, outsource where necessary and team up with private partners to become more cost effective. Stiff competition from cheaper rivals and steep repayments for a new aircraft fleet have hit the carrier’s bottom line, leaving it with a 20.9-million-pound net loss in 2003. «As our immediate priority we must increase revenue and cut expenses… We have no other avenue but to take measures which will possibly be painful and may even concern staff redundancies,» Loizides said. Insiders say staff at the airline received considerable pay increases last year. Loizides, who had then approved the hikes, told shareholders staff costs must now come down. «Staff costs, which represent more than 30 percent of operational expenses, is one of the few cost sectors that we can influence and control,» he said. Outsourcing services to contain costs was also an option, as were joint ventures in the catering, ground services and possibly technical support sectors, he said. Earlier, an airline source told Reuters that 43 people on contracts would lose their jobs from the closure of certain units. Cyprus Airways plans to shut down its catering unit at Paphos airport, part of its cargo and postal office and part of the baggage sorting unit. The company is majority state-owned. Its share price closed at 9.7 cents on the Cyprus Stock Exchange on Wednesday, with no trade.