Sterling Airlines A/S, the Icelandic-owned low cost airline has been declared bankrupt and ceased operations citing rising fuel prices in the first half of 2008, and the 2008 Icelandic financial crisis that severly hit its biggest investor.
Sterling Airlines A/S was Denmark's second-largest carrier in terms of fleet size. It is the latest addition to a list of over two dozen airlines globally who have gone under this year.
In a statement on its website, the airline said it had filed for bankruptcy as it had failed to find a buyer. The airline grounded its fleet of 24 planes registered in Denmark with immediate effect, and is now facing liquidation.
Rising fuel prices, declining traffic growth and the global financial crisis has deters tourists and business travellers from air travel.
The airline's owner, Palmi Haraldsson, had originally planned to provide adequate capital to keep Sterling airborne until 2009, but his efforts were undermined by the collapse of the Icelandic financial system, the airline said in its statement. Sterling said customers who HAD bought tickets on the company's website would not receive refunds; the broadcaster TV2 estimated the number of people holding worthless tickets at around 40,000.
On 24 October, Iceland secured a $2.1 billion loan from the International Monetary Fund. Stockholm-based SAS Group's Danish unit, which has the country's largest fleet, has offered stranded Sterling customers free transportation, excluding airport taxes, back to Scandinavian destinations.
Sterling Airlines was set up in 1962, when Danish travel agency Tjæreborg's founder Eilif Krogager started a charter airline with two old Douglas DC-6B bought from Swissair to better service his own package tours from Scandinavia to the Mediterranean.
In 1993, Sterling Airways went bankrupt, and was resurrected in 1994 as Sterling European Airlines with three aircraft and 182 staff. In 1996, Sterling was bought by the Norwegian shipping company Fred. Olsen.
In March 2005, Fred. Olsen sold Sterling to the Icelandic investment company Fons Eignarhaldsfélag, In June 2005, the Fons Eignarhaldsfélag bought Maersk Air from the A.P. Moller-Maersk Group and announced the intention to merge the two airlines under Sterling Airlines A/S. In October 2005, a month after the merger was approved, Fons Eignarhaldsfélag sold the company to the FL Group. In December 2006, FL Group sold Sterling to Northern Travel Holding, a holding company owned by the three Icelandic private equity companies FL Group, Fons Eignarhaldsfélag, and Sons.
Budget airline Norwegian Air Shuttle ASA said it would open offices in Copenhagen to address demand after Sterling's collapse, and will add 11 routes serving the Danish capital by May 2009 and five routes connecting with Stockholm this month.
Ryanair Holdings Plc, Europe's biggest discount airline is offering a €100 ($127) ``rescue fare'' for stranded Sterling passengers.