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Russia suspended on Friday the operations of Red Wings, controlled by liberal billionaire Alexander Lebedev, after the company's passenger jet crashed in December killing five of its crew members.
The state air transport agency said it was suspending the company's operations because Red Wings was experiencing financial problems which precluded it from ensuring proper maintenance of its fleet.
"Red Wings is experiencing a deficit of financial resources to ensure the current operations," Rosaviation said following a probe into the airline after the December 29 crash.
The state watchdog said that the probe had exposed "numerous significant violations in the organisation of flights, technical maintenance of aircraft, training of pilots and other shortcomings."
The flights will be suspended from Monday, said the statement, encouraging those who were set to fly with the company in the near future to return the tickets.
Lebedev whose company operates a fleet of modern Tu-204 jets said the state watchdog was suspending the company's operations without a reason.
"Russian officials decided that the Tu-204 is dangerous and because we are the only company to fly Tu-204 planes they decided to suspend us and not the plane type ," he told AFP.
Speaking on Echo of Moscow radio, he denied that his airline was struggling financially and added the suspension of its operations would effectively mean the end of the company.
In a separate statement, Lebedev whose family owns Britain's The Independent and Evening Standard dailies and part-owns Russia's most critical opposition newspaper Novaya Gazeta suggested the move was part of an ongoing campaign to discredit him.
Last year he was charged with hooliganism after he punched a guest on a television show and now faces up to five years in prison. A Moscow court is scheduled to open the trial against Lebedev on Thursday.
In a tweet on Friday, Lebedev alleged that the head of the powerful Investigative Committee, Alexander Bastrykin, was behind the state aviation watchdog's decision.
"He has managed to ground Red Wings," Lebedev said on Twitter. "He won over the government, the Kremlin and the Russian aviation industry."