Thousands stranded as Australian airline goes bust

SYDNEY: Budget carrier Air Australia collapsed Friday, stranding thousands of passengers as its domestic flights and international services to Honolulu, Bali and Phuket were all grounded.

The news came a day after embattled Australian flagcarrier Qantas said it was slashing at least 500 jobs, cutting costs and closing two international routes after posting an 83 percent slump in first-half net profits.

In a statement on its website, the Brisbane-based Air Australia, whose 300 staff have been stood down, said it had appointed KordaMentha as voluntary administrators.

"In the short-term, the fleet will be grounded. It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately," the administrator said.

"For clarity, it also appears highly unlikely there will be any flights in the short to medium term."

Air Australia flew international routes to the Indonesian island of Bali, Thai holiday paradise Phuket, and Hawaii, and domestically to Brisbane, Melbourne, and Perth, Derby and Port Hedland in Western Australia.

Administrator Mark Korda said up to 4,000 passengers were currently overseas with Air Australia return tickets and advised them to find alternative arrangements. (AFP)