PricewaterhouseCoopers said it had been appointed administrators after a failure by Globespan Group, the owners of Flyglobespan, to secure a new investor for the airline.

Most of the 800 staff with the Edinburgh-based airline, which has 10 aircraft, will be made redundant, the administrators said.

"The directors have concluded with regret that the business can no longer continue to operate," said Bruce Cartwright of PWC.

"We are acutely aware of the distress this situation will cause those travellers who are currently abroad, as well as the impact on those holidaymakers who have booked travel for later this year or 2010."

"Over the coming days we will be focusing our efforts on ensuring Globespan customers have all the information they require to both return home or to determine the next steps in terms of whether or not they can secure refunds."

Around 5000 passengers had booked to travel with Flyglobespan in the coming days, the administrators said, while some 4000 other customers are currently in Spain, Portugal, Cyprus and Egypt. In 2006 the airline launched a charter service from Manchester to South Africa, but this was withdrawn at the end of summer 2007.

About 1300 passengers had been due to fly on Thursday, it said. However, all flights have been cancelled and will not be rescheduled, a statement on Flyglobespan's website said.

Britain's transport minister Paul Clark said efforts were being made to try to get stranded passengers home for Christmas.

Set up in 2002, the airline operated flights from Edinburgh, Glasgow and Aberdeen in Scotland, as well as transatlantic flights from Manchester, Gatwick and Belfast.

On Monday, the airline denied it was on the brink of collapse, saying a major investment package was about to be finalised.

Earlier this year, Flyglobespan announced it had made an operating profit of £1.2-million following a loss of £19-million the previous year, reports said.