Brindabella Airlines has gone into receivership and its 140 staff have been temporarily stood down, without any form of payment or compensation.
Based in Canberra, Brindabella services regional New South Wales destinations including Orange, Mudgee, the Snowy Mountains, Moree and Tamworth.
A spokesman for receivers KordaMentha, which will attempt to reinvigorate the airline, told ABC News: “The reaction is a mix of fairly high emotion and sadness. A lot of people in these businesses love what they do and are passionate about what they do."
KordaMentha said finances of Brindabella "haven’t been good for quite a while and that’s part of the very, very competitive situation that exists for regional airlines, and Brindabella’s not on their own there".
All flights have been suspended indefinitely, as the airline struggles with millions dollars worth of debt.
Last week, the Civil Aviation Safety Authority grounded six Brindabella planes due to maintenance issues.
Earlier, four planes were grounded because engine inspections were overdue.
