Cypriot government to keep flag carrier flying over summer

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The Cypriot government says it will continue to offer near-term financial support to flag carrier Cyprus Airways, dismissing local media reports that the airline faces imminent bankruptcy.

"The Council of the Ministers has...decided that, for specific reasons regarding mainly the touristic summer period in Cyprus, the company must be kept alive throughout the season," government spokesman Christos Stylianides says in a statement.

He adds that efforts are under way to secure a strategic investor in the airline "as soon as possible", but that immediate restructuring will be necessary if these negotiations are to succeed.

Stylianides declines to comment on the status of talks with Chinese firm Beijing Yi Xiang Da Investment, saying: "This concerns a private company and its board of directors is responsible for any negotiations related to it. There are ongoing negotiations...but the timeframe is very short."

Cyprus Airways remains the subject of a European Commission investigation into its recent €31.3 million ($41.1 million) capital injection and €73 million rescue package by the government. The EU says it has "doubts" about whether the aid respects competition laws, and it has blocked the government from providing further support without the Commission's approval.

The Cypriot flag carrier posted a full-year operating loss of €50 million in 2012, with revenues falling almost 20% to €175 million.