Debt grounds Hungary's Malev

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Debt grounds Hungary's Malev

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Hungary’s debt ridden state owned airline Malev has ceased operating after running out of money.

Hungarian Prime Minister Viktor Orban said the decision to ground the country’s flag-carrier was made after aircraft were not allowed to take off from Tel Aviv and Ireland because of unpaid debts.

Last month the European Union said the carrier has to pay back 130 million euros of state aid it had received.

Malev said its suppliers had lost confidence and started to demand advance payment for their services, while the government could no longer provide cash injections for the company because of the European Union ruling.

Malev said over 7,000 passengers had been stranded in Hungary or abroad and the government had set up a fund to compensate those who needed to buy tickets from other airlines to get home.

The airline, which has been flying for 66 years, is now expected to launch bankruptcy procedures and announce mass layoffs.