Troubled Cypriot national carrier Cyprus Airways is set to close its loss-making Greek subsidiary Hellas Jet in May, according to company sources.

Two ministers of the Cypriot government, which owns a 60 percent-plus stake in the national carrier, had also indicated over the weekend that the unit would be closed, according to state-run radio.

"An announcement will be made to the stockmarket on Monday," said one company source, who asked not to be identified by name.

Cyprus Airways' management, the source said, had decided on a "controlled closure" of the company, which operates out of Athens.

"This means we will assume all our responsibilities, pay off debts to suppliers and compensate staff," the source added.

Hellas Jet was created in 2003 to tap an anticipated surge in travelers to Athens for the 2004 Olympic Games. But it was clocking up losses of about EUR1.5 million (USD$1.9 million) a month, adding to Cyprus Airways' financial woes.

The Cypriot airline has been hurt badly by low-fare competitors and a surge in fuel costs. It booked steep losses in 2004 and is in the throes of a radical shake-up to pull it back to profit.

Redundancies for about 10 percent of Cyprus Airways' estimated 2,000 staff are being contemplated after the airline sacked half of its senior management late last year.

The survival strategy also includes spin-offs of catering and baggage handling units.

Hellas Jet operates three leased Airbus A320s.

Cyprus Airways will make arrangements to sub-let the aircraft until the expiration of the contract in May 2006, the company source said.