Danish-based low-cost carrier Sterling Airways said today it would file for bankruptcy after its cash-strapped Icelandic investors were unable keep the company airborne.
"During the last few weeks, the management, board of directors, and the shareholder of Sterling Airlines have been fighting a battle to keep the company alive," the company said in a statement.
"Sadly, this has not had a positive outcome, and we have therefore decided to file for bankruptcy which will be done later today," it added.
Sterling has cancelled all of its flights, leaving many passengers stranded, and travellers holding tickets would not be refunded by the company, it said.
Other Scandinavian carriers such as SAS and Norwegian were helping stranded travellers book empty seats on their flights, media reports said.
Sterling is owned by Northern Travel Group, comprised of Icelandic investment groups Fons, FL Group and Sund.
Iceland's once booming financial sector has collapsed under the weight of the worldwide credit crunch, pushing the country to the brink of bankruptcy and forcing the government to take control of the major banks as its currency has nosedived.
"Over a three to four week period, the whole financial system melted down, and that resulted in our shareholder being unable to continue his support to the company," Sterling said.
"Negotiations have been conducted with several potential investors, but it was impossible to make ends meet. The inevitable result is that Sterling Airlines has no option but to file for bankruptcy," it said.
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