Hungarian flag-carrier Malev announced on Friday that it had stopped operating because its liquidity situation has become unsustainable and all its flights had been grounded as of 0500 GMT on last Friday February 3rd.

Malev, placed under bankruptcy protection this week, halted all flights at 6 a.m. in Budapest, Chief Executive Officer Lorant Limburger said in a statement. The carrier’s cash-flow became “untenable” after service providers “lost faith” and the European Commission barred further state support, he said.

“Unfortunately, what we fretted about the most and what we’ve done the most to avert has come to pass,” Limburger said. “The board has ordered that the Hungarian national airline stop operations. We extend our apologies to all of our passengers.”

Malev, founded in 1946, was already effectively operating in bankruptcy protection, having been declared a “strategically important company” on Jan. 30, a status that shields it from creditors. A member of the Oneworld airline alliance that includes British Airways, Malev reported a loss of 24.6 billion forint in 2010, the latest year for which results are available, little changed from its deficit in 2009.

The carrier’s plight worsened Jan. 9 when the European Commission ruled that it should return the equivalent of $390 million in “unlawful aid” paid by the government from 2007 to 2010, saying it would have struggled to raise cash from a private investor. Malev borrowed 5 billion forint in December and received 8.5 billion forint in budget funds in August.

The carrier employs 2,600 people and is responsible for close to half of all air traffic at Budapest Liszt Ferenc airport. Part of the Oneworld airline alliance, which also includes American Airlines and British Airways, Malev has a leased fleet of 22 passenger aircraft.