Cyprus Airways entire fleet was grounded on Tuesday in a staff walkout over redundancies at the loss-making national carrier.

About 14 scheduled flights carrying 2,500 people would be affected by the action on Tuesday, an airline spokesman said.

Industrial unrest has been simmering for months over plans to sack more than 100 employees from a work force of around 2,000 to cut staff costs.

The company announced record 2004 pre-tax losses earlier this week of CYP36.9 million pounds (USD$83.8 million), as margins were hit by fleet renewal costs and competition.

An open ended strike could have a devastating impact on the airline, which on Monday pleaded for financial backing from the government to cover short and long-term operational needs.

The state controls more than 65 percent of Cyprus Airways.

The carrier fired a dozen executives in late 2004 and warned more redundancies would follow. It sacked 22 senior flight stewards on Monday, triggering a walkout by flight attendants. They were joined by pilots on Tuesday.

Most of Tuesday's scheduled flights were to European destinations. "We will try to carry all the passengers either through our subsidiaries or other airlines," spokesman Tassos Angelis said.