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4,000 stranded as airline goes bust

Thousands of travellers from Hawaii to Thailand are stranded after budget airline Air Australia ran out of cash and went into voluntary administration, grounding its five-jet fleet.

The Brisbane-based international and domestic airline, formerly known as Strategic Airlines, said all flights had been cancelled and the airline would not be accepting new bookings because it could no longer pay its bills.

Voluntary administration can buy a company time to trade out of its financial problems.

"It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately," the airline said. Passengers who bought tickets with credit cards or had travel insurance may be given a refund, the airline said.

Around 4,000 passengers were overseas with Air Australia round-trip tickets, voluntary administrator Mark Korda said. Some of those affected were stranded in Honolulu and Phuket, Thailand.

"Overnight, the company was unable to refuel its planes in Phuket," Mr Korda told Australia's Fairfax Radio. "The directors appointed us at 1.30 this morning and the boys have been working throughout the night to deal with what's a very difficult situation."

Australian airline Qantas and Jetstar, its budget subsidiary, were considering adding services to help stranded passengers get to their destinations, Qantas chief executive Alan Joyce said.

He said the airline would sell stranded passengers tickets for the same price they paid for their Air Australia tickets, giving them a chance to recover the full price from their travel agencies or credit card companies.

Air Australia's fleet consists of five Airbus A330-200 and A320-200 aircraft, and regularly flies to Bali, Phuket, Honolulu and cities within Australia.

Mr Korda said Air Australia's administrators were calling for immediate expressions of interest in the sale of the business.

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