Air Italy's investors have agreed to place the Italian carrier into liquidation, the airline has said, citing "persistent and structural market problems".
The decision was taken "unanimously", the carrier said, but in a separate statement, Qatar Airways, which holds a 49% stake, said that it would have been ready to support the relaunch and growth of the airline.
"Qatar Airways was ready once again to play its part in supporting the growth of the airline, but this would only have been possible with the commitment of all shareholders," Qatar said.
Formerly known as Meridiana, Air Italy is Italy's second-largest airline behind Alitalia. Regional carrier Alisarda, which is controlled by the Aga Khan, owns the remaining 51% of the carrier.
Under current rules, foreign investors cannot own more than 49% of a European airline.
After heavily investing in Meridiana, the Aga Khan was not ready to inject any further money in Air Italy, Italian daily la Repubblica reported. The Aga Khan's representative was not immediately available to comment.
Qatar Airways, which also has stakes in other international carriers including China Southern and Cathay Pacific, acquired its holding in loss-making Air Italy in 2017 and rebranded it, transforming it into a long-haul airline.
Last year, Air Italy said it expected to be profitable "soon", even though the airline also said it had been hurt by the grounding of Boeing's troubled 737 MAX.
The Sardinia-based airline had launched a five-year business plan which aimed to reach 10 million passengers by 2022 from the 2.4 million carried so far.
But the airline's expansion came under scrutiny in Washington, where lawmakers said its US routes flouted a deal between the largest US carriers and Gulf airlines not to add new flights to the US domestic market.
Liquidation Process
Under the liquidation process - legally different from a bankruptcy - suppliers and staff will be paid off, with no outstanding debt left at the end of the process.
Air Italy said that flights will continue until February 25 and flights booked for later dates will be reimbursed or re-booked on to other carriers.
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