State-owned carrier Cyprus Airways suffered a post-tax loss of 18.9 million euros  in 2011 due to the economic downturn, stiff competition and a dip in passenger traffic.

The cash-strapped airline returns to loss after a €232,000 profit in 2010.

"This considerable decrease in revenue was mainly attributed to the reduction in passenger and freight revenue, despite the improvement in yields," the company said.

It said the Greek debt crisis and the difficult economic environment in Europe would have a knock-on effect across the airline industry.

"The current year continues to be affected by the economic downturn and the intensifying competition in the main markets where the company operates," said Cyprus Airways.

Greece is considered a key market for the airline but the debt crisis in that country has affected passenger flow, as have competitors offering low fares.

Currency fluctuations between the euro and the US dollar, turmoil in the Middle East and employment insecurity in Europe were other factors that could undo the airline.

"The group does not have the ability to influence these factors, which have the potential to adversely affect efforts to secure its long term viability."

Cyprus Airways said total revenues reached 212.4 million euros ($285 million) in 2011 compared to 236.3 million euro in 2010, representing a decrease of 10.1 percent.

Operating expenditure, including the cost of sales and administrative expenses, increased 1.9 percent to 264.7 million euro ($356 million) from 259.8 million euro in 2010.

Cyprus Airways -- looking for a strategic investor -- said it was preparing an action plan to ensure company's long term viability.

This plan includes axing staff, reducing its 12 aircraft fleet, streamlining the flight schedule, cutting labour costs and a €45 million capital issue.