The European Commission gave its green light Tuesday to a state aid bailout for ailing Cyprus Airways, giving the airline six months to organize its restructuring.

The European Union (EU)'s executive approved the 30 million Cyprus pound (51 million euro, 66 million dollar) loan guarantee after ensuring it did not breach EU state aid rules, and also in view of the potential impact of the airline going under.

"Two thousand four hundred 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," it said in a statement.

"The possibility of the aid having any adverse spill-over effects on other (EU) member states is limited by its size, its short duration and the relatively small size of the beneficiary," it added.

Welcoming the decision, Cyprus Airways chairman Lazaros Savvides said the EU decision meant the company could move forward with a reworked survival plan to ease the state carrier out of crippling debt.

"We are happy with this approval of the loan ... This frees our hand to go ahead with the restructuring of the airline.

"It is a new action plan for Cyprus Airways based on the previous one ... But not everything can be done in six months," Savvides told reporters in Nicosia.

The Cypriot government, which has a 70 percent stake in the airline, appointed Savvides in March after its former boss resigned in the wake of a botched cost-cutting move.

The money-saving move involved the elimination of dozens of jobs, downsizing the airline's fleet by selling off two Airbus A320 planes and shedding its loss-making Greek subsidiary Hellas Jet, which is now due to stop operations on May 10.

Savvides himself has conceded that Brussels advised the government that Cyprus Airways, for its size, should be operating on only half the staff it employs at present.

The chairman has warned of "painful measures" to come in a new upgraded restructuring drive but refrained from spelling out the extent of jobs and services cuts.

Cyprus Airlines posted a net loss of more than 31 million Cyprus pounds in 2004, up from 20.9 million a year earlier.