Jochen Riebel, a former local secretary of state who represents minority shareholder Hesse on the airport's board, said Hahn would use up all its cash within about six months without more finance.

Passenger numbers at Hahn, a former military base 100 km from Frankfurt used mainly by budget carrier Ryanair (RYA.I), fell 8 percent in the first half of 2012 as a German airport tax pushed flyers to cheaper airports in neighbouring Netherlands.

Riebel told the Mainzer Allgemeine Zeitung newspaper that Rhineland-Palatinate state, the majority owner of Hahn, could not afford another high-profile insolvency like that of the Nuergburgring race track.

"The equity capital will be used up in March 2013 and then management would have to file for insolvency," Riebel was quoted as saying.

Spokespeople for both Hahn and Rhineland-Palatinate told Reuters the airport's finances could worsen in 2013 if passenger numbers fell further but denied it was at risk of exhausting its equity capital.

They said the airport, which made a loss of 10 million euros in 2011, had equity capital of 44 million euros which would not be used up by the end of 2013.

Rhineland-Palatinate could take over responsibilty for infrastructure such as roads and buildings, a spokesman for the region's infrastructure ministry told Reuters. (Reporting by Sabine Wollrab and Peter Maushagen; Writing by Victoria Bryan; Editing by David Cowell)

• A Permanent Economic Emergency