Cyprus Airways said on Wednesday its net losses widened to CYP39.4 million Cyprus pounds (USD$86.2 million) in 2004 after fully assuming the losses of a Greek subsidiary slated for closure.

Cyprus Air had reported 2004 unaudited net losses of CYP33.5 million (USD$73.3 million) in February, but was in the meantime slapped with a call option to buy up a remaining 25 percent share in Hellas Jet.

"The change reflects the share of losses of other (former) shareholders of Hellas Jet," Cyprus Airways said in a statement to the Cyprus Stock Exchange.

Cyprus Airways established Hellas Jet in 2003. Based in Athens, it was created to tap an anticipated surge in business to Greece in the run up to the 2004 Olympics.

The group decided to dispose of it in April after raking up losses of about CYP1 million (USD$2.2 million) a month, deepening broader financial problems at the carrier.

Now operating in a fully deregulated market, Cyprus Airways is fighting to fend off cheaper operators elbowing into its turf and faces a massive fleet renewal bill.

Earlier this month the European Commission approved a government loan guarantee as rescue aid for the cash-strapped carrier, majority owned by the state.