Ticket revenue had dried up amid coronavirus travel bans.
Virgin Australia has confirmed it has entered voluntary administration - making it Australia's first big corporate casualty of the coronavirus pandemic.
The country's second-largest carrier cut almost all flights last month following wide-spread travel bans.
It was already struggling with a long-term A$5bn (£2.55bn; $3.17bn) debt.
The airline is now seeking new buyers and investors, after failing to get a loan from Australia's government.
Virgin Australia chief executive Paul Scurrah said: "Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis.
"Australia needs a second airline and we are determined to keep flying."
Meanwhile, Sir Richard Branson - whose Virgin group is a part-owner of Virgin Australia - has offered a Caribbean island as collateral to help get a UK government bailout of Virgin Atlantic. Read more >>