Hungarian flag-carrier Malev has stopped operating because its liquidity situation has become unsustainable.

All flights were grounded from 6am this morning.

The airline had been placed under extraordinary protection from creditors after a receiver was appointed earlier this week.

Malev said its suppliers had lost confidence in the airline and started to demand payment, while the government could no longer provide cash injections for the carrier.

“This has accelerated the outflow of cash to such an extent, that by today the situation of the airline has become unsustainable,” Malev’s board said in a statement.

The stoppage comes after the airline was ordered by the European Commission last month to repay millions of dollars worth of state aid received between 2007 and 2010.

Low cost rival Wizz Air announced today that it would provide a special rescue package to passengers affected by the suspension of Malev’s operations by offering re-routing alternatives to and from Budapest.

The airline is offering passengers booked on Malev’s Budapest to Gatwick service rescue fares on its Luton to Budapest route.