Hungarian airline Malev ceased operating early on Friday after two of its planes were held at foreign airports due to unpaid debts.
One of the planes was held at Ben-Gurion International Airport; the other was held in Ireland, said Hungarian Prime Minister Viktor Orban on Friday.
The decision to ground the Hungarian national carrier after 66 years of operation leaves thousands of travelers stranded, including many Israelis.
This makes Malev the second European airline to collapse within a week. A week ago, Catalan airline Spanair halted operations suddenly - also due to financial distress - leaving 23,000 passengers stranded, including many Israelis.
Malev has debts totaling $270 million. A court had placed the airline under trusteeship on Thursday, and ordered it to make payments only if they were essential to keep operating.
A month ago, the European Union demanded that the airline repay 130 million euros in state aid it had received between 2007 and 2010.
The first people impacted by Malev's collapse were travelers scheduled to depart from Ben-Gurion to Budapest at 5:30 A.M. Friday morning. Israeli flight authorities blocked the plane's takeoff due to the airline's $400,000 debt to the Israel Airports Authority.
The flight was canceled, and travelers were sent home, or forced to look for alternatives.
Meanwhile, the flight crew and plane are waiting in Israel for permission to leave.
The airports authority said that it informed the airline that it needed to immediately pay its debts when a flight landed in Israel early Friday morning, and that if it did not, the plane would not be allowed to depart. This came after repeated warnings, and was spurred partly by the airline's bankruptcy announcement, it noted.
Malev had operated a daily flight from Budapest to Tel Aviv, and 106,300 people flew on this route in 2011, said the authority.
An estimated 7,000 people were affected by Malev's grounding. The airline said it would find alternative flights for people scheduled to fly Friday, Saturday and Sunday, so long as their tickets were purchased before it ceased operations.
Local travel agents urgently petitioned the court, asking that they be allowed to withhold upcoming payments to Malev in a bid to protect customers' money.
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