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EU probes Cyprus Airways, Estonia Air state aid

04 February 2014, 23:46 CET
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(BRUSSELS) - The European Commission opened Tuesday in-depth investigations to see if state aid for struggling airlines Cyprus Airways and Estonia Air complies with EU rules.

Both airlines are hanging on while being restructured with government funds -- some 103 million euros in the case of Cyprus Airways and 41 million euros for Estonia Air.

The Commission said the probe in both cases examines if their restructuring plans will return both airlines to financial health without distorting competition too much in the meantime.

In the case of Cyprus Airways, the Commission said it has doubts the restructuring plan will work and whether the airline "is capable of withstanding likely challenges in the air transport market during the next years."

"It is also uncertain whether the proposed capacity reduction through the cancellation of routes is sufficient to compensate for the distortions of competition created by the state support."

The Commission also has concerns that the airline's contribution to the cost of restructuring may be insufficient, it added.

The Commission, the EU's executive arm, expressed the same concerns over Estonia Air's future.

The opening of an in-depth investigation gives interested third parties the opportunity to comment and does not prejudge the outcome, the Commission noted.


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