Aviation: Malev ceases operations

Malev's management says the decision was made when it became clear that the airline could no longer afford to sustain operations.

It had been selling tickets as recently as 24 hours before the announcement.

The company has substantial debts - as much as 250 euros according to some reports - and has been struggling to raise capital.

The airline is owned by the Hungarian government which did not mount a direct rescue operation.

A statement by the company says that the crisis reached a head because partner airlines began to demand that it pay its bills in advance under code-share and other agreements. Malev is part of the OneWorld Alliance which includes Qantas, BA and Cathay Pacific.

The collapse was rapid: just four days earlier, the company had been put into receivership under the control of a government appointed receiver.

Two aircraft have been impounded - one in Israel and one in Ireland pending settlement of the airlines debts in those countries. All other aircraft are now in Hungary. Malev says it will hand its 22 aircraft back to the company from which it leases them. It has been implied that one reason for the sudden cessation was due to fears that more aircraft would be impounded in foreign airports once the airline's parlous state became widely known.

Even worse, the airline that is 95% state owned, has ordered to repay approximately euro350 million in state subsidies which the EU says were illegal under EU law.