Hungarian national airline Malev halted operations on Friday, leaving more than 7,000 passengers stranded after the European Union ordered it to pay back government aid.

"Since the government can no longer provide resources due to the EU's decision and there is no feasible partner in sight, the company's operations became impossible," Malev chief Laszlo Berenyi told a news conference.

"Every [partner] has asked for payments in advance, and claims accelerated incredibly," he added. "No company can honor payments months in advance."

Managing Director Lorant Limburger apologized to the some 7,200 passengers - 3,500 in Hungary and over 3,700 abroad - who were expecting to board Malev flights on Friday, saying the cash outflow from the company became "unsustainable."

The grounding of all planes left some 7,200 passengers stranded

Passengers outside Hungary were advised to purchase tickets from other airlines and send Malev the bill for reimbursement. The government has also set up a fund worth two billion forints (6.9 million euros, $9 million) to compensate passengers scheduled to fly on Friday and the following three days.

Restart 'not impossible'

Last month, the European Commission ordered Malev to repay the Hungarian government nearly $400 million it received in state subsidies between 2007 and 2010. The subsidies had been found to be in violation of European law.

"It is a painful thing," Prime Minister Viktor Orban told MR1-Kossuth state radio. "We tried to keep Malev on track as long as we could, but this is as far as we could go."

Orban added that he was hopeful Malev could find new investors, and that "a restart is not impossible."

The airline employs some 2,600 people. Lead administrator Balazs Fabian said the company would be pushing through "mass layoffs," but did not specify how many would be affected.

acb/slk (AFP, AP)