Low-frills Debonair Airways grounded all its planes yesterday after a court ordered administrators to take charge of the loss-making British airline. A day after Debonair's shares were suspended on the European Easdaq stock exchange, passengers were given the bad news when they arrived at Luton airport, the airline's main base north of London.

"As a result of its financial position the company has suspended all scheduled flight services," Debonair's statement said. Debonair, which has 14 aircraft, has failed to turn a profit since it began operations in 1996. But its chairman, Mr Franco Mancassola, had been upbeat about prospects after losses for last year declined to £13 million sterling from £16.5 million, and turnover rose 39 per cent to £43.2 million.

Industry analysts said it fell victim to the cut-throat battle between a growing number of budget airlines competing for European business.

On Thursday, before the High Court administration order, industry sources said Debonair was looking for a "white knight" to rescue it. Germany's Lufthansa and Swissair, which already have operating agreements with Debonair, were seen as possible candidates.

Mr Richard Branson's Brussels-based Virgin Express might also be interested. A Virgin spokesman said yesterday that Mr Branson wanted a meeting with the administrators.

"Until we talk to them we're not going to be able to say anything else," the Virgin spokesman said.

Ryanair said yesterday it had no interest in buying Debonair and claimed the loss-making airline had used a flawed business model.

"Essentially they're flying expensive aircraft, smaller aircraft, flying through expensive airports," said Ryanair's commercial director, Mr Michael Cawley. "There was never a question but that they'd go out of business."

Mr Cawley claimed Ryanair would carry more passengers in three weeks than Debonair in a year. "They're an entirely different operation. They've been doing `low fares' business traffic - that's a contradiction in terms."

Debonair was the second budget European airline to fail in quick succession. On Thursday AB airlines, which went into administration on July 30th, said its operations had been suspended.

Analysts said Debonair failed to keep its costs low enough. Unlike most budget airlines, it operates a frequent flier programme and provides business class. It paid among the best salaries in the sector.

But two airlines - Easyjet and Virgin - quickly blamed Debonair's demise on British Airways, the giant which has its own no-frills airline called Go.

In a statement yesterday, Easyjet said BA had "blood on its hands" because it was subsidising Go until all the other players were forced out of business.

The Virgin spokesman said Debonair's crisis had confirmed Mr Branson's "worst fears" about Go.

"There's nothing wrong with competition as long as it's fair and doesn't involve larger competitors using their muscle unfairly," the spokesman said.

There was no immediate reaction from BA.

Debonair passengers arriving at Luton were told yesterday to contact their travel agents to seek alternative flights.

If they bought their tickets direct and were suffering financial loss, the passengers were told to write to the administrators. "The administrators are unable to comment at present on the likelihood of passengers' claims being reimbursed," a statement said.