Air Australia has suspended all services with immediate effect and appointed administrators to the company.
The Brisbane-based carrier, formerly known as Strategic Airlines before November of last year, had been operating a small fleet of leased Airbus jets.
"In the short term the fleet will be grounded," it said. "It currently appears that there are no funds available to meet operational expenses, so flights will be suspended immediately."
It added that it was "highly unlikely" that any flights would operate in the short to medium term.
Air Australia said it had appointed KordaMentha's John Park and Mark Korda as voluntary administrators, as of 17 February.
It stated that passengers should pursue refunds for any tickets, as the airline would probably not be able to carry out services.
The carrier started up in 2009 as Strategic Airlines and took over the troubled Australian charter operator OzJet in the same year.
It obtained both an Australian air operator's certificate and a French one for European services, although it ran into difficulties with the latter. The carrier built its fleet around the Airbus A330 and A320.
Air Australia added that the administrators will decide on the company's strategy over the next few days and weeks.