Greek airline Hellas Jet will suspend flights from May 10, its financially-troubled Cypriot parent company Cyprus Airways said on Thursday.

The two-year old airline is the latest casualty of deep financial problems at the Cypriot national carrier, which is pinning hopes for its own survival on government-backed loans.

"This decision was taken because market conditions are not favorable for an implementation of its business strategy," Cyprus Airways said in a statement to the Cyprus Stock Exchange.

The state-controlled Cypriot airline created Hellas Jet in 2003 to tap an anticipated surge in business to Athens, host of the 2004 Olympic Games.

It carried out scheduled flights from Athens's Eleftherios Venizelos Airport to Brussels, Manchester, London Heathrow and Paris.

But Cyprus Air executives privately say the Greek company was losing EUR1.5 million (USD$2 million) a month, adding to financial problems Cyprus Airways already had and caused by cheaper rivals elbowing in on their turf.

The Cypriot airline posted a record pre-tax loss of CYP36.9 million Cyprus pounds (USD$82.9 million) last year. It is now waiting for European Union approval for an urgently needed loan guaranteed by the government, and redundancies are planned.

Cyprus Airways said last week it would exercise a call option to acquire the remaining 25 percent of Hellas Jet from AEF European Capital Investment.

Company sources said the call option, costing Cyprus Air between CYP3.2 million and CYP3.4 million (USD$7.2 million - USD$7.6 million), was a contractual obligation the Cypriot airline had since the inception of Hellas Jet in 2003.