Cobalt Air defaulted under the weight of damages reaching EUR 100 mln and its inability to meet its immediate capital needs, it was reported Thursday.
The company halted all activities as of midnight the same day, just 27 months since its first commercial flight.
The closure of Cobalt has left thousands of travellers stranded either on the island or abroad, with the Transportation Ministry stepping in to arrange for their return home and their compensation.
Meanwhile, some 280 employees have also been left without a job.
The cost of repatriating all travellers affected by the airline’s closure is expected to reach EUR 2 mln with the government taking on most of the cost.
Meanwhile press reports say that no traveller who has paid for their ticket electronically is to lose out as money paid for tickets initially flow to a separate fund and are transferred to the airline once the flight has taken place.
Off to a bad start
Cobalt Air got off to a bad start since its first commercial flight in July 2016. Flying before it had received the fleet of planes it needed to fulfil its ambitious flight schedule, left travellers facing long delays.
The company's bad start burdened balance sheets, and in combination with the rapid expansion of the flight program to countries in Europe and the wider region, the airline had accumulated large losses.
Cobalt Air had put its hopes on a French investor who was to invest EUR 7 mln in the company, he did not follow through on his commitment and as a result Cobalt announced an immediate halt to its operations.
Alekos Michaelides, permanent secretary of the Transportation Ministry said several hundred tourists are stranded on the island and the government will make all arrangements for their smooth repatriation as soon as possible. He said: "This measure is necessary to preserve the good name Cyprus has a tourist destination".
Transport Minister Vassiliki Anastassiadou held an emergency meeting Thursday with civil aviation and officials from the general accountant’s office and a representative of Hermes Airports.
Michaelides added that the Ministry had followed latest developments in the company and had received reassurance that the company was to stay afloat.
"We were aware that something was happening with Cobalt and we were monitoring the situation. We had invited one of the company's directors from China who reassured us, on behalf of the company's shareholders, that they were to refinance the company so that it would continue its flight program," said Micahelides.
Anastassiadou tweeted: “Hard times. Our thoughts are with the staff of Cobalt. At the same time, we are doing everything possible to minimize the inconvenience of passengers”.
According to CNA, two tour operators have been called in to handle the chaos created by the abrupt closure of Cobalt Air.
Top Kinisis and Orthodoxou Travel have been given the mandate to arrange for the repatriation of tourists stranded on the island and Cypriots left abroad.
Cobalt’s last flight arrived at Larnaca Airport at 00:20 from London Heathrow. The company's first cancelled flights were the outbound flights to Abu Dhabi, Athens, Dusseldorf, Paris and London, and inbound flights from Tel Aviv, Beirut and Athens scheduled to take place on Thursday.
