Copenhagen - Low-cost Danish airline Sterling Airlines announced Wednesday it was to file for bankruptcy and has grounded all flights stranding thousands of passengers.

In a statement on its website, the airline cited that it had been impacted by the global financial recession that started in the autumn of 2007 and led to a "stagnation in the market."

The carrier also cited "significant fuel cost increases" as a factor that contributed to its problems, as well the global credit crunch that impacted its main shareholders in Iceland.

The Sterling statement said that passengers who had bought tickets online would not be refunded and would have to seek alternative flights home.

The rival SAS Group said it would offer to help transport Sterling passengers back to Denmark.

Sterling has some 1,100 employees. (dpa)