Ryanair
Ryanair chief executive Michael O'Leary eyeing a slice of Cyprus AirwaysReuters

Budget airline Ryanair has entered into negotiations with the Cypriot government regarding a possible takeover of Cyprus Airways.

State-owned Cyprus Airways has been a loss-maker for a number of years now as it struggles to match its competitors' pricing, after Cyprus became one of the economic recession's bigger casualties.

Last month it was put up for sale by the Cypriot government and Ryanair was one of 20 companies that expressed non-binding interest in the carrier.

Chief executive of the Irish airline, Michael O'Leary had previously stated that he was "not particularly interested" in the possible acquisition. He appears to have changed his tune.

"We are engaged in the process and hope something will come of it," he said at a press conference. "It's a very political process down there."

If a deal were to go ahead, it is understood that Cyprus Airways would retain its branding, but would function under a different air operator's certificate, O'Leary told the assembled press.

The Ryanair boss has also said that under his control, Cyprus Airways' passenger numbers would almost quintuple from the current 600,000 annually to three million.

Cyprus Airways first received government aid in 2007 has been fighting an uphill battle for several years now as it looks to turn around its fortunes.