Low-cost carrier Germania has slipped into administration and cancelled all flights with immediate effect.
The decision will see sister maintenance company Germania Technik Brandenburg also file for insolvency at Amtsgericht Berlin-Charlottenburg.
The Berlin-based airline, which flew to destinations across Europe, Africa and the Middle East, transported more than four million passengers a year.
Swiss airline Germania Flug and Bulgarian Eagle are not affected by the step.
Staff at the German carrier have been informed of the decision.
Karsten Balke, chief executive, Germania Fluggesellschaft, said: “Unfortunately, we were ultimately unable to bring our financing efforts to cover a short-term liquidity need to a positive conclusion.
“We very much regret that consequently, our only option was to file for insolvency.
“It is of course the impact that this step will have on our employees that we regret the most.
“All of them as a team always did their best to secure reliable and stable flight operations – even in the stressful weeks behind us.
“I would like to thank all of them from the bottom of my heart.
“I apologise to our passengers who now cannot take their Germania flight as planned.”
Passengers affected by the suspension of flight operations who booked their Germania flight as part of a package holiday are advised to contact their tour operator in order to organise new flights.
Passengers who booked directly with Germania are, however, not entitled to rebooking.
Germania’s short-term liquidity need emerged mainly due to unforeseeable events, the carrier said.
These include increases in fuel prices last summer and the simultaneous weakening of the euro against the US dollar.
There have also been considerable delays in phasing aircraft into the fleet at the carrier and an unusually high number of maintenance events.