XL Airways faced a demand for an immediate $3.6 million payment to Barclays Bank, plunging it into insolvency.
The newspaper said documents revealed that XL, a low-cost scheduled and chartered airline operating out of London's Gatwick Airport, owed $18 million to the bank and that it went into administration Friday when it wasn't able to come up with the cash.
XL chief executive Phil Wyatt blamed the collapse on soaring oil prices and a rising dollar.
Meanwhile, industry executives warned that the holiday travel season could be thrown into chaos as 30 more airlines worldwide were in dire financial shape and could be grounded.
British Airways chief executive Willie Walsh told the Times, "We have seen 30 (airlines) worldwide go. I would be very surprised if it is not something similar to that in the next three or four months."