Sweden's Skyways Express and its subsidiary City Airline have ceased operations with immediate effect, and will file for bankruptcy on 22 May.
"The owners of the company have decided not to fund the company any longer and therefore the board of directors was forced to decide to stop all payments and to stop all flights," says the airline in a statement on its website.
Cyprus-based Mansvell Enterprises, which owns Skyways, is also the owner of Danish carrier Cimber Sterling which filed for bankruptcy in early May.
Mansvell had acquired a majority share in Cimber Sterling in June 2011 and planned a broad co-operation deal with Skyways and City Airline. But the investment group appears to have abandoned these plans after deciding to stop funding the airlines.
"We have come far in turning the company around but after the bankruptcy of Cimber, it became almost impossible to continue," says Mikael Wangdahl, chief executive of Skyways and City Airline.
Skyways and City Airline have a fleet of Fokker 50s, BAe 146, and Embraer ERJ-135s and -145s. They operated on domestic routes in Sweden and to several European cities.