Airline Sterling to file for bankruptcy

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Copenhagen, October 29: : Icelandic-owned Nordic budget airline Sterling said it will file for bankruptcy on Wednesday and has grounded all its aircraft, leaving thousands of passengers stranded at airports across Europe.

The Denmark based carrier said on its website talks had been conducted with several potential investors, but it had been impossible to make ends meet.

"The inevitable result is that Sterling Airlines A/S has no option but to file for bankruptcy," it said.

Sterling said its Icelandic owner Palmi Haraldsson had injected 444.5 million Danish crowns ($74.6 million) into the firm, which has struggled with high fuel bills and expansion costs, between July and September 2008.

Previously, "the plan was to continue financial support into 2009," Sterling said. (http://www.sterling.dk/).

"Over a 3 to 4 week period, the whole financial system melted down, and that resulted in our shareholder being unable to continue his support to the company," the airline said.

Iceland's financial system and wider economy has all but collapsed amid the global financial crisis.

Sterling could not be reached for further comment.

The airline flew to some 40 destinations in Europe with a fleet of around 27 Boeing 737 aircraft, mainly from its hubs in Scandinavian capitals Copenhagen, Oslo and Stockholm. The airline has about 1,100 employees.

Sterling said customers who have purchased tickets on its website would not be refunded, nor would return flights be honoured.

Scandinavian competitor SAS told Danish national broadcaster DR it would offer stranded Sterling ticket holders free flights back to Denmark from foreign destinations when possible over the next 48 hours.

SAS could not immediately be reached to comment the report.