US business class carrier Eos Airlines has filed for bankruptcy and has ceased all operations.
Eos filed its petition for Chapter 11 protection in US bankruptcy court for the southern district of New York.
The airline said it was on the verge of closing a deal that would have carried the company to financial profitability in 2009, but the agreement fell through.
Jack Williams, Eos' CEO, said: "After overcoming today's extremely challenging economic and credit environment to negotiate terms for a round of financing, it is regrettable that we were forced to take this action.
"It is regrettable that, even though investors continue to be enthusiastic about our business model, and even though we had a term sheet in hand, we were unable to close on the financing we needed. That leaves us with insufficient cash on hand to continue operations.
"There are times in business when even though you execute your business plan and even though your employees do their jobs beautifully, external forces prevent you from controlling your own destiny."
Eos flew between New York and London and UK rival Silverjet has stepped into the breach, offering stranded passengers a seat provided they book before May 10th.
High fuel costs are squeezing airlines' margins. Earlier this month, long-haul operator Oasis announced that it is going into administration, leaving hundreds of passengers stranded in Hong Kong.
And at the beginning of the month, Silverjet confirmed that it was in takeover talks, raising £21 million including a £10 million loan from Reuben Brothers last November.