One of UK's biggest airlines, Flybe, collapsed Thursday with all its flights grounded, the company said, as the new virus epidemic takes a heavy toll on airlines around the world.
A statement on Flybe's website said the company had entered administration and could not arrange alternative flights for its passengers.
"All flights have been grounded and the UK business has ceased trading with immediate effect," said the airline, which avoided going bust in January only after being granted a tax holiday by the UK government.
Flybe, which employs 2,000 people, had failed to turn around its fortunes since being purchased by the Connect Airways consortium last year, initially owing to weak demand and fierce competition.
That has now been compounded by the new virus outbreak, with a slew of airlines cancelling flights and warning profits would take a hit from decreased demand.
Flybe is the biggest operator of UK domestic flights. The no-frills airline carries around eight million passengers annually and flies from 43 airports across Europe and 28 in Britain.
It comes hours after British media reported that the airline could collapse after failing to secure a 100 million pounds (129 million U.S. dollars, 115 million euros) state loan.
The virus' impact on travel "has made a bad situation much worse," sources told the BBC.
Small British airlines have also suffered recently from volatile fuel costs and a weak pound.
The Connect Airways consortium is led by Virgin Atlantic and also includes investment firm Cyrus and infrastructure specialist Stobart.