Cyprus Airways flights resumed on Wednesday after the airline withdrew redundancy notices which triggered a strike grounding the fleet on Tuesday, officials said.

"Everything is back on track and flights are going ahead as planned," said airline spokesman Tassos Angelis.

Compounding mounting financial problems, Cyprus Airways' 2,000 staff walked out on Tuesday over management's decision to sack 22 pursers in a cost-cutting drive.

The airline backed down amid scathing criticism from the government -- its main shareholder -- which said it had not followed proper dismissal procedures.

The action disrupted 14 flights carrying 2,500 people, but the airline said most people got to their destinations with other airlines.

The national carrier posted heavy pre-tax losses of CYP36.9 million pounds (USD$83.8 million) in 2004, hit by fleet renewal costs and mounting competition.

It dismissed a dozen senior executives last year, and said that more would follow. Cost cutting would also involve spinoffs of catering and baggage handling divisions and the disposal of its Greek subsidiary, Hellas Jet.