SkyEurope Airlines, the Slovakian discount carrier, lost its battle against bankruptcy yesterday, leaving travellers stranded in airports from Manchester to Bratislava.
A raft of budget rivals, including easyJet and Ryanair, rushed to offer cheap "rescue" tickets to passengers stranded abroad after the company grounded its planes.
SkyEurope's failure comes as no surprise to industry-watchers. The company started in 2002 and grew quickly – boosted by the expansion of the EU in 2004. It raised €120m (£106m) when it listed on the Viennese stock exchange the following year, but rapid growth never turned to profits.
New management, brought in two years ago, backed the airline out of Polish and Hungarian markets to focus on Vienna, Prague and Bratislava, but to no avail. Last year, the group's losses ballooned to €62m and the fleet was cut from 15 aircraft to just five.
With the global industry struggling with the toxic combination of volatile fuel prices and crushed economic confidence, SkyEurope made little progress. The first quarter of 2009 saw the carrier slip another €15m into the red and the group went into bankruptcy protection in June, just weeks before the departure of Jason Bitter, the chief executive.
Last month SkyEurope was offered a lifeline, in the shape of a €16.5m investment offer from Austria's Focus Equity. But the money was contingent on the successful conclusion of a major restructuring of the company, and SkyEurope went bankrupt too quickly to comply. By August, the carrier's flights were banned by Vienna for non-payments of bills, with Prague and Bratislava following suit last week.
The Slovakian company joins a growing list of airlines brought down by the global downturn. More than 80 have gone bankrupt since the start of 2008. And while SkyEurope may be the first major collapse in Europe this year, it is unlikely to be the last.
SkyEurope was popular in the UK for weekend trips from London Luton and Manchester. Some passengers with tickets booked on SkyEurope flights may be entitled to a refund from their credit or debit card providers. The Atol scheme will also protect most travellers who booked flights through a travel agency as part of a package, although it may not cover late-bookers.
Abta, the travel association, said the situation reinforces its calls to the EU and UK government to make it a legal requirement on airlines to provide financial protection for passengers.
Mark Tanzer, the chief executive of Abta, said: "This airline failure in a tough economic climate, along with several others last year, highlights the need for urgent action to plug this gaping hole in customer financial protection."