Alitalia will enter bankruptcy proceedings after staff at the Italian flag-carrier rejected a restructuring plan.
In the short-term the carrier’s flight schedule will continue to operate as planned, as administrators examine whether the airline is viable.
Alitalia has received nearly £6 billion from the Italian state over the last decade, and is 49 per cent owned by Abu Dhabi-based Etihad Airways.
However, without further financial support it may be permanently grounded.
Employees last week voted against a plan to cut jobs and salaries.
Alitalia said in a statement that Italian shareholders and Etihad had both been “committed to recapitalise and finance the airline with up to €2 billion in new funds.
However, without the approval of workers, the plan could no proceed.
The Italian government has given the carrier €400 million bridging loan to allow it to keep operating during the bankruptcy process.
The finance minister, though, has ruled out renationalising, or providing further funds for, the troubled carrier.
An Alitalia statement explained because of “the serious economic and financial situation of the company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative” they had decided to proceed with the filing for extraordinary administration.