Passengers stranded as Cypriot airline goes bust

Cyprus said Thursday it will pay to ensure hundreds of Cobalt Air passengers stranded on the holiday island can return home safely after the sudden collapse of the low-cost carrier.

In a surprise announcement posted on its website late Wednesday, the airline said it was cancelling all flights from shortly before midnight "due to indefinite suspension of Cobalt's operations".

It warned customers its offices would no longer be staffed and urged them to seek refunds through their credit card company or travel agent.

Cobalt's grounding comes just two weeks after Latvia-based Primera Air filed for bankruptcy and a month since Belgian airline Skyworks took the same course.

The airline was launched only two years ago, filling the void to become the Mediterranean island's biggest carrier after state-owned Cyprus Airways went bankrupt in January 2015.

Employing many pilots from the defunct national carrier, it went on to operate 13-15 flights daily, taking up to 3,000 passengers to 23 destinations including Athens, Beirut, Heathrow, Paris and Tel Aviv.

But late on Wednesday night, its website was abruptly replaced with a single-page statement announcing the cancellation of all of its flights from 23:50 pm.

Its last flight was reportedly in the air on the way back to Larnaca from London at the time.

"As a result, future flights or services provided by Cobalt will be cancelled and will no longer operate," the statement said, without elaborating on the reasons.

- Emergency meeting -

The airline advised passengers with tickets against going to Larnaca International Airport or attempting to contact its offices "as no Cobalt flights will operate and no Cobalt staff will be present".

"We sincerely apologise once again and would like to thank our very loyal customers for their support over the last two years of Cobalt operations."

Nine flights had been scheduled to arrive and nine to depart from Larnaca airport on Thursday.

Hundreds of passengers were left stranded, although it was not immediately clear exactly how many.

Airport authorities said there was no panic in the departures hall, with passengers appearing to have stayed away after learning about the airline's fate and the flight cancellations.

On Thursday the Cypriot transport minister emerged from an emergency meeting on the situation to say everything would be done to minimise the inconvenience for those stuck in Cyprus and abroad.

Vassiliki Anastassiadou said Cyprus would cover the cost for passengers to return home up until October 24, while adding that this did not absolve the airline of its liabilities towards customers.

"The cost of the tickets will be covered by the state for repatriation purposes only," the minister told reporters.

"We... feel the need to help passengers trapped either in Cyprus or abroad who want to return to their place of residence."

Two travel operators on the island had been instructed to manage the repatriations and issue tickets on other airlines.

- Financial struggles -

Anastassiadou described the situation as "regrettable" as it comes at time Cyprus is enjoying a surge in its vital tourism sector with arrivals in 2018 expected to exceed last year's high of 3.6 million.

The minister confirmed the airline was struggling but had informed authorities it was looking for funding.

"It seems they were not able to do this, but we had also given Cobalt a deadline of October 22 to present its financial situation," she said.

Officials told the state-funded Cyprus News Agency that Cobalt had accumulated tens of millions of dollars in debt since its first commercial flight in July 2016.

Other reports put the debt at around 100 million euros ($115 million).

They said Cobalt had ceased operations after failing to reach a deal with a potential European investor to help it pay for leasing its six aircraft -- two Airbus 319s and four Airbus 320s.

Reportedly, the company had only 15 million euros left in its accounts, which it needed to pay its 200-air crew and 50 ground staff.

There was speculation that it was facing cash-flow problems after two of its aircraft were grounded for two days.

Although Cobalt refused to comment on the rumours, sources within the company reportedly attributed the liquidity problems to difficulties faced by Chinese investors in exporting capital due to Chinese government restrictions.

The airline's largest shareholder is AJ Cyprus, with 49 percent of the shares. AJ Cyprus is owned by China's AVIC Joy Air.

Cyprus is a hugely popular holiday hotspot for Britons -- with over a million flying to the island each year.