Scottish holiday carrier Flyglobespan has ceased operations after its tour operator, Globespan Group, collapsed.
The Edinburgh-based company had been hoping to obtain a funding package from external investors, and earlier this week had expressed confidence that the deal would be closed.
But Globespan says that administrators have been appointed to both the tour operator and its ground-handling operation Alba today. The airline, it adds, is "likely" to be placed into administration tomorrow.
It is blaming "liquidity issues" for the decision, adding that the administrators have been "unable to continue trading the companies".
"All flights have been cancelled and will not be rescheduled," it says. The aircraft fleet has been grounded.
Budget carriers Ryanair and EasyJet have already stepped in to offer special fares to stranded passengers.
The Civil Aviation Authority states that passengers who booked flights through the tour operator, Globespan, will be protected by its Air Travel Organisers' Licensing (ATOL) scheme.
But it adds that passengers who purchased flight-only tickets directly from the airline, Flyglobespan, are not covered.
Globespan Group says: "Flyglobespan passengers already abroad will need to make their own arrangements to return to the UK using alternative airlines."
Flyglobespan, launched in 2003, operated to holiday destinations in North America, Egypt and Europe using a fleet of Boeing 767s and 737s. It also provided capacity to the UK Ministry of Defence.
It had intended to operate Boeing 787s having arranged to take a pair from the US lessor International Lease Finance (ILFC).