Kroes start onderzoek naar herstructurering Cyprus Airways (en)

woensdag 22 maart 2006

The Commission has today decided to open a formal investigation procedure into a restructuring plan proposed in November 2005 by the Republic of Cyprus to restore the viability of the ailing State-owned flag-carrier. The Commission has doubts that the current plan is in accordance with the Community framework for rescue and restructuring of firms in difficulty.

In May 2005 the Commission authorised a grant of rescue aid, which took the form of a government-backed loan of CYP 30 million (EUR 51 million)[1]. The positive decision by the Commission included an undertaking by the Cypriot authorities to notify a restructuring plan for Cyprus Airways. The plan is made up of a number of separate but complementary actions:

  • A long-term government backed loan of CYP 55 million (EUR 96 million)
  • The sale of Cyprus Airway's charter Eurocypria to the government for an expected sum of approximately CYP15 million (EUR 26 million)
  • Downsizing of the workforce and ongoing cost cutting
  • A planned capital increase of CYP 14 million (EUR 24 million) scheduled to take place 18 months after the start of the restructuring and dependant on the successful implementation thereof.

The Commission is not in a position to assess the exact amount of state aid that this plan would include, nor to determine whether this aid would comply with the various conditions applicable to aid for restructuring firms in difficulty, especially as regards the limitation of aid to the minimum and the need to avoid undue distortion of competition.

The Commission will now send a letter explaining its doubts and questions on the proposed restructuring plan, which will be published in the Official Journal of the EU. The Cypriot authorities and interested third parties will have one month at their disposal to send their comments on this letter.


[1] IP/05/521 : Rescue aid for Cyprus Airways