EC approves rescue aid for Cyprus Airways

The European Commission decided to authorise rescue aid for Cyprus Airways, the Cypriot flag carrier. The aid consists of a CYP 30 mln (EUR 51 mln) loan guarantee for the next six months so as to allow the authorities to organise the restructuring of the airline.

The Commission has examined the rescue aid for Cyprus Airways and checked that it complies with Community rules, notably:

The aid is in the form of a loan guarantee of EUR 51 mln (CYP 30 mln) granted at market rates. The amount of aid is limited to what is needed to manage the short term cash flow deficit of the company.

Moreover the Cyprus authorities have undertaken to furnish the Commission with a restructuring plan for Cyprus Airways within six months of authorisation of payment of the aid.

‘The aid is also warranted on the grounds of serious social difficulties. 2,400 staff members work directly for companies within the Cyprus Airways group, which is not an inconsiderable number given the size of the total Cyprus workforce’, the Commission notes.

It adds that the possibility of the aid having any adverse spill-over effects on other member states is limited by its size, its short duration and the relatively small size of the company.