GILLAirways, the Newcastle-based regional carrier, has been placed in administration by its new chief executive Malcolm Naylor.
The airline will continue to run its services as scheduled while administrators Arthur Andersen restructure the loss-making Gill.
After streamlining the company, the management consultants will seek a buyer for the airline.
Naylor became chief executive at Gill Airways last month (Travel Weekly February 7).
The airline blamed debts from an ill-fated deal with failed carrier Euroscot Express and a downturn in customers over the new year for the substantial losses.
A spokesman could not say how much Gill was in debt.
He claimed the jobs of 465 staff were not in jeopardy but admitted that the administrators were reviewing Gill’s network.
The airline uses a fleet of 16 turboprop aircraft to operate flights to Paris from Newcastle and Teesside on behalf of Air France and also runs its own UK network to destinations such as Belfast and Aberdeen.
Gill Airways also took over Bournemouth flights to Glasgow and Edinburgh from Euroscot Express last summer.
Administrator Iain Watters, a partner in Arthur Andersen, confirmed that services would run as normal while his firm reviews staffing levels, the route network and franchise agreements with Air France and the Royal Mail.
He said: “We will restructure the business as necessary, with a view to the airline emerging from administration as a going concern.”
Watters revealed that Gill incurred a large debt while leasing aircraft to the now defunct Euroscot Express airline, which collapsed in July after failing to secure $5m for investment.
The airline’s debts also increased due to higher than forecast staff training costs.
The airline becomes the fourth UKcarrier in just a year to bring in administrators after running up high debts. The first troubled airline, Euroscot Express was followed by ABAirlines and then Debonair last autumn.