Cypriot national airline, Cyprus Airways was shut down following a European Commission ruling Friday that the company had illegally received state aid.
Cypriot Minister of Finance, Harris Georgiades and Minister of Communications, Marios Demetriades said at a joint press conference that the licence of the government-owned company was revoked and its flying programme terminated with immediate effect, according to a Xinhua report.
The ministers also announced alternative arrangements for Cyprus Airways passengers following the termination of the ailing carrier's operations.
"These alternative arrangements... are possible to include the use of chartered airplanes, the transportation of passengers with another airline to his or her destination... or any combination of the above," the ministers said in a statement.
The decision to immediately shut down the Cypriot national air carrier, which was established in 1947, came after the European Commission, the executive body of the European Union (EU), announced that Cyprus Airways would have to pay back about 100 million euros (about $118 million) in state aid it has received since 2007.
"Cyprus Airways needs to pay back all incompatible aid received," EU Competition Commissioner, Margrethe Vestager said.
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The commissioner ruled that the state aid gave the company an undue advantage over its competitors in breach of EU rules.
The commission also found that Cyprus Airways "had no realistic perspective of becoming viable without continued state subsidies" and that injecting more money into the company would not achieve a turn-around".
Cyprus government spokesman Nicos Christodoulides had said earlier that the government was prepared for any scenario, having made plans for the establishment of a new airline in association with the private sector so as to safeguard air communication in the island country.
He also said that the government made provisions for the company's 500-strong staff.
Several staff members gathered outside Cyprus Airways headquarters in protest of its closure as the board met inside the building to plan the company's winding down.
Cyprus Stock Exchange had announced that it decided to delist the company's shares as of Jan 13 after it failed to submit preliminary financial statements from 2012 onwards.
Efforts by the government last year to sell Cyprus Airways either to the low-cost airline Ryanair or Greece's Aegean Airlines failed as they did not follow their initial expression of interest with firm offers.