A Cyprus government spokesman says a state-owned airline will be liquidated and its employees compensated after the European Union ruled out any merger with the island's larger national carrier.
Stefanos Stefanou said on Friday that compensation for 265 Eurocypria employees will be government funded under a plan that must first clinch EU approval.
He said majority state-owned Cyprus Airways will absorb part of the Eurocypria staff "under market rules and according to the needs" of the airline as EU rules dictate.
Stefanou said Cyprus Airways' 1,300-strong staff will also be trimmed under an EU sanctioned early retirement scheme.
The spokesman said on Thursday that Eurocypria will be shut down because Cyprus can't sustain two competing airlines.