Icelandic crisis claims budget airline

Budget carrier Sterling Airways said today it was filing for bankruptcy because of the financial meltdown.

The airline, which is based in Denmark but Icelandic-owned, said it was unable to raise financial support for a restructuring programme because of the collapse of the Icelandic financial system.

“During the last few weeks, the management, board of directors, and the shareholder of Sterling Airlines A/S have been fighting a battle to keep the company alive,” the airline said in a statement on its website.

“Sadly, this has not had a positive outcome, and we have therefore decided to file for bankruptcy which will be done later today.”

Sterling said it would not be able to refund passengers who had bought online tickets.

The company, owned by Iceland’s Northern Travel Holding, operated low-frills flights within Scandinavia, and between Scandinavia and a range of European destinations.

Sterling said it was hit last year by a slowdown in the market and rising fuel prices and the airline started accumulating large losses this year.

It implemented a restructuring programme to reduce the fleet and staff, which was planned for next year.

But the funding for the programme vanished when the Icelandic owner was hit by the crisis in the North Atlantic island’s banking system.

“Negotiations have been conducted with several potential investors, but it was impossible to make ends meet,” the airline said.

“The inevitable result is that Sterling Airlines A/S has no option but to file for bankruptcy.”