The story
The airline was established in 2003 and, in May 2004, started operations with the delivery of two Airbus A330-200 aircraft. It was owned by Celuisma (20%), Hotusa (20%), Herpil (12.5%), Catalonia Hoteles (10%), Quo Viajes (10%), Viajes Eroski (10%) and others. Air Madrid planned to start a new short-haul scheduled arm to provide feeder traffic to its long-haul flights from Madrid. It also had talks to lease five Airbus A320 aircraft for services to Amsterdam, Frankfurt, London, Milan and Paris.
In September 2006, the company had started experiencing longer-than-usual delays and several cancellations, with delays of up to 60 hours on flights to Latin America. As reported in El País, most of these delays were triggered by Spanish aviation authorities for safety reasons, refusing to allow certain aircraft to operate due to poor maintenance. After an investigation, the Dirección General de Aviación Civil recommended limiting Air Madrid's flights or suspending their licence altogether.
The International Air Transport Association (IATA) announced that Air Madrid was suspended from IATA operations worldwide on December 15, 2006, following confirmation that the airline had ceased operations. On 16 December 2006, Air Madrid suspended all flights, leaving thousands of people stranded, as a consequence of a Spanish government investigation into its operations and due to constant customer complaints regarding poor service, which resulted in the cancellation of its operational licence.
Air Comet signed a deal with the Spanish government to take over the Latin American routes formerly operated by Air Madrid. The airline took on 53% of the Air Madrid workforce and agreed to fly back stranded passengers.
From Wikipedia’s article on Air Madrid, shared under CC BY-SA 4.0.4