Italian flag-carrying airline Alitalia has filed for bankruptcy in order to protect itself from creditors and continue its operations.
The troubled carrier has declared itself insolvent and called in administrators to assist it in streamlining its business, which could see it split in half.
However, the company has refuted suggestions it may be forced to cease all flights as a result - citing its special circumstances, courtesy of a 300 million (£240 million) government grant.
One of the potential solutions to Alitalia's current predicament could see a foreign airline or investor take over parts of the business to halt its alarming slide into debt.
Reports suggest the company has been losing up to 2 million a day as a result of the widening global credit crunch.
The news comes on the same day all flights operated by low-cost carrier Zoom were grounded because the company could not support itself off the back of soaring costs.
The Canadian-UK airline said it had no choice but to ground aircraft after an "unprecedented increase" in the price of aviation fuel. The company's fuel bill went up by as much as $50 million (£27 million) in one year, according to co-founders Hugh and John Boyle.