"After detailed discussions, we have sadly concluded that we will not be proceeding with further talks as there is little we feel we can do to help," a spokesman for the group, owned by Richard Branson said.

The receivers for troubled airline Debonair say that part of the business is likely to be preserved.

Administrators Deloitte & Touche say it is likely that the part of the business Debonair operates on behalf of Swissair will be preserved.

A decision by Lufthansa is expected by the end of the week, Deloitte & Touche added.

Several other parties were interested in saving the remaining business, a statement from Deloitte & Touche said. Some reports have suggested that Easyjet and Virgin are among those considering buying part of the business.

The administrators said there would be a number of redundancies due to lack of available funds, but they added that other operators may offer alternative employment.

In addition, they said that wherever possible, it had been arranged for other operators to carry Debonair passengers who had booked prior to administration.

Flights with Debonair - which is in financial turmoil - were cancelled on Friday, leaving passengers stranded at Gatwick and Luton airports.

BA has come under attack from other "no-frills" airlines for forcing Debonair out of business by setting up its own low-cost subsidiary, Go.

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Rival airline EasyJet said that BA had "blood on its hands" because it was subsidising Go until all the other players were forced out of business.

Virgin boss Richard Branson, which runs discount airline Virgin Express, joined in the criticism.

A spokesman for Virgin said it confirmed his "worst fears" about Go.

Go and easyJet's spats are well known - but Debonair has also suffered

"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.

But Go chief executive Barbara Cassani hit back.

"To suggest that one company would cause the demise of another airline is ridiculous," she said.

"My reading on Debonair is they took quite a different business strategy to many of us in the low cost airline business," she added.

Ms Cassani did reveal, however, that Go had made its first profit in the second quarter of the year.

BA offers to help

Go has joined with charter airline Britannia and British Airways in arranging for the rescue of passengers stranded by Debonair's demise.

Richard Branson: "No frills airlines could be in trouble"

British Airways has said it would fly Debonair's passengers to or from the UK for 25% of the lowest bookable fare.

The spokesman said the offer would last as long as the travel chaos caused by the airline's collapse continued.

Go, meanwhile, will fly passengers back for £40 on a stand-by basis from destinations it serves in common with Debonair.

No last minute rescue

Nick Dargan and Ralph Preece of D&T, who are now dealing with the affairs of the company, are looking for a buyer.

Mr Dargan said: "Our primary concern now is to try to secure continued operations or to make alternative arrangements for passengers who have already purchased tickets.

"We are in negotiations with both Swissair and Lufthansa to try to achieve this."

Virgin, however, said it might still be interested in the airline.

Debonair employed 480 personnel and operated 14 aircraft from Luton and Gatwick to Germany, France, Spain and Italy.

Its turnover had grown to £45m this year.

But it had not made a profit in the three years since its launch and is the second cut-price European carrier to suffer difficulties this summer.

AB airlines went into administration on 30 July. Its receivers are continuing to have discussions with parties interested in the company's assets.

No backers

The main reason for Debonair's difficulties is the fact that it is the only one of the "no-frills" airlines not to have a major backer.

While Go has BA behind it, Virgin Express has Richard Branson and Easyjet has the backing of the wealthy Stelios Haji Iannou and family.

Then there is Buzz, which is due to enter the market in the New Year with the backing of the Dutch airline KLM.

Another factor which has hit Debonair was its decision a year ago - in a break from "no-frills" tradition - to upgrade itself to a business travellers' airline.