Monarch Airlines has ceased trading and all its future flights and holidays have been cancelled, affecting hundreds of thousands of customers.
About 860,000 people have lost bookings and more than 30 planes will be sent by the Civil Aviation Authority to return 110,000 holidaymakers who are overseas.
Monarch employs about 2,100 people and reported a £291m loss last year.
Terror attacks in Tunisia and Egypt, increased competition, and the weak pound have been blamed for its demise.
Theresa May's official spokesman said the prime minister "feels hugely sorry" for those affected by a "very distressing situation".
Monarch - the UK's fifth biggest and the country's largest ever to collapse - was placed in administration at 04:00 BST - a time when the airline had no planes in the air.
Passengers were then sent text messages informing them flights had been cancelled - but some customers were already at airports.
Advice to Monarch customers
- Customers in the UK yet to travel: Don't go to the airport, the CAA says
- Customers abroad: Everyone due to fly in the next fortnight will be brought back to the UK at no cost to them. There is no need to cut short a stay. Those with flight-only bookings after 16 October are unlikely to have Atol scheme protection, so will need to make their own arrangements
- Customers currently overseas should check monarch.caa.co.uk for confirmation of their new flight details - which will be available a minimum of 48 hours in advance of their original departure time
- All affected customers should keep checking monarch.caa.co.uk for more information
- The CAA also has a 24-hour helpline: 0300 303 2800 from the UK and Ireland and +44 1753 330330 from overseas
What has gone wrong?
Monarch reported a loss of £291m for the year to October 2016, compared with a profit of £27m for the previous 12 months, after revenues slumped.
It had been in last-ditch talks with the CAA about renewing its licence to sell package holidays, but failed to reach a deal.
He said it had been carrying 14% more passengers than last year - but for £100m less revenue.
Mr Swaffield said employees could "hold your heads up high and be proud of what you achieved".
Monarch's owner, Greybull Capital, had been trying to sell part or all of its short-haul operation so it could focus on more profitable long-haul routes, and said it was "very sorry" it had not been able to turn around its fortunes.
What have the authorities said?
The CAA said the situation was "unprecedented".
Chairwoman Dame Deirdre Hutton said there would inevitably be some disruption as the authority was having to effectively create one of the UK's largest airlines from scratch, adding: "It is a huge undertaking."
Passengers from as far away as Tel Aviv will require repatriation, and two "rescue flights" from Ibiza have already landed at Gatwick, the CAA said. The vast majority of customers due to fly on Monday are expected return by the end of the day.
According to the CAA, the 110,000 holidaymakers currently overseas are in at least 11 countries, including Spain, Portugal, Italy and Greece.
Replacement flights are currently scheduled to fly to 33 airports.