Cyprus Airways (1947) (Larnaca) has suspended operations effective immediately in the evening of Friday, January 9 following a ruling by the European Commission that a total of EUR102million (USD120 million) in state aid provided by the Cypriot government to the carrier would be considered illegal state aid.

The EC argues that since Cyprus Airways already received a major sum of state aid in 2007 but still was not able to survive on its own, the additional subsidies in 2012 and 2013 were illegal, given they just artificially kept the national carrier operating six A320-200s alive and that no private investor would have acted in a similar fashion.

Following Malev (Budapest), this is the second time that a EC ruling on state aid forces a EU national carrier to suspend operations. Cypriot finance minister Harris Georgiades told the BBC that "the company has ceased being a viable entity, and cannot continue to operate" as it would not be able to pay back the state aid. The EC also said in its ruling that the restructuring plans for Cyprus Airways were "unrealistic". According to EU rules, airlines can only receive aid "one time, last time" once during a 10 year period to help with a realistic restructuring plan that private investors would have also been supporting in a similar situation.

Cyprus Airways until yesterday served Amsterdam Schiphol, Athens, Beirut, Frankfurt International, London Heathrow, London Stansted, Moscow Sheremetyevo, Paris CDG, Tel Aviv Ben Gurion and Thessaloniki. With the exception of the Amsterdam and Frankfurt routes, it sees year-round competition from Aegean Airlines (A3, Athens), MEA - Middle East Airlines (ME, Beirut), British Airways (BA, London Heathrow), S7 Airlines (S7, Novosibirsk), Aeroflot (SU, Moscow Sheremetyevo), Arkia Israeli Airlines (IZ, Tel Aviv Ben Gurion) and UP by El Al (Tel Aviv Ben Gurion) on all other routes.

It is widely expected that both Aegean Airlines (A3, Athens) and Ryanair (FR, Dublin International) are interested in opening bases in Larnaca to replace some of the capacity lost by the liquidation of Cyprus Airways. Aegean previously used to operate a base at Larnaca airport already. Aegean already announced daily A320-200 flights from Larnaca to Tel Aviv Ben Gurion starting March 29 and three times weekly A320-200 service linking the main Cypriot airport with Kyiv Igor Sikorsky from March 31.

The government of Cyprus has announced that it will make alternative arrangements for all passengers affected by the liquidation of Cyprus Airways by either chartering aircraft from other carriers or buying tickets from other airlines for non-stop or connection flights. Regardless, Ryanair has also announced rescue fares itself for Cyprus Airways passengers on its flights from Paphos to Athens, London Stansted and Thessaloniki.