Virgin Australia is set to go into voluntary administration in the biggest airline collapse in Australia since Ansett failed in 2002, putting thousands of jobs and more than a billion dollars in prepaid tickets at risk.

On Monday night sources said the airline, which has been largely grounded since 25 March due to the coronavirus crisis, will appoint John Greig, Vaughan Strawbridge and Richard Hughes of big four accounting firm Deloitte as administrators.

The move comes after the federal government rebuffed its plea for a $1.4bn loan as part of a wider bailout of the industry and despite duelling offers of support from New South Wales and Queensland.

An announcement is expected as early as Tuesday morning.

Virgin Australia employs 10,000 people whose employment is now in jeopardy.

Also to be decided is the fate of its fleet of about 130 planes, many of which are mortgaged to the hilt, and almost $1.2bn in customer ticket bookings.

The move also sparked fears of sky-high air fares for consumers if bigger rival Qantas is once again able to establish dominance of the Australian market.

Administration is likely to wipe out the value of stock in the group, including that held by dominant shareholders Singapore Airlines, Chinese groups Nanshan and HNA, the government of Abu Dhabi through state airline Etihad and billionaire Richard Branson.

However, administration may also help a buyer to reduce or eliminate a debt mountain of more than $4.8bn owed to banks that has crippled the airline as it continued to burn through cash while its planes were grounded.

It may also be able to close parts of the airline that are not performing well, such as budget arm Tiger.

This would allow Virgin Australia to eventually fly again, even if in a reduced form.

It is understood that chief executive Paul Scurrah is likely keep his job for the time being.

Over the past fortnight Scurrah has been fighting against what he sees as a campaign against Virgin Australia by Qantas, as well as dealing with a government that repeatedly said it was committed to keeping two airlines in Australia but has so far been unwilling to bail out the company.

The government has offered the industry about $700m in reduced fees and charges, but these are only of value if planes are flying.

It has also offered $165m to underwrite Virgin Australia and Qantas operating a “minimum domestic network servicing the most critical metropolitan and regional routes”, but because this money only covers the cost of operating the flights it does not improve Virgin Australia’s financial position.

Its collapse raises the prospect of Qantas once again enjoying a monopoly over major Australian air routes, as it did after the collapse of Ansett in 2002.

This resulted in fares rising, the former competition tsar Allan Fels told Guardian Australia.

The Flight Attendants’ Association of Australia said it was important that governments gave thought to what they wanted the aviation industry to look like after the coronavirus crisis passed.

“We cannot have a complete abandonment of competition. It took 20 years to get Virgin to a position where it was a competitor to Qantas,” FAAA’s manager of industrial relations, Steven Reed, said.

“We need Virgin in some form, so that people can afford to fly on Qantas,” he said.

“People should recall what the airline industry was like when there was no meaningful competition under the two airline policy of the 1970s and early 1980s.

“Unless the government caps airfares, then the market will set fares and it will be back to $1,000 return to Melbourne, or $3,000 return to Perth [from Sydney].”

Reed said it was important to keep Virgin trading through administration as Ansett did in the 1990s when it went into administration to ensure that some jobs are preserved.

“Administration has great uncertainty, and it doesn’t mean that our people keep their jobs, or that their conditions survive,” he warned.

He said the union movement was greatly disturbed by the governments’ recent regulations which allow enterprise bargaining agreements to be changed at the drop of a hat.

Reed also warned that Virgins’s collapse could prove more expensive for government than a bailout.

“At the end of the day, the only people paying tax at Virgin are the employees,” he said. Virgin has paid no tax for several years as it has failed to run profitably.

Virgin Australia has been in the red every year for the past five years, running up losses of more than $1.6bn. It lost an additional $88m in the six months to the end of the year.

Transport Workers’ Union national secretary Michael Kaine said administration would be a “terrifying moment for thousands of Virgin workers” and repeated his previous calls for the federal government to bail the company out.

“It is a viable and much-needed business and without it Australia will struggle to get its economy back on track once the crisis abates,” he said.

“There is still time for the federal government to work on an investment plan to get through this period of crisis and taxpayers will get a double benefit. The government will retain a competitive aviation market and they will get a return on their equity stake.

“The prime minister has promoted the concept of hibernation, of keeping viable businesses afloat through this crisis. That must include Virgin and the only way to do that is a government equity stake in this business.”

Of the $4.8m the airline owes to its banks, $540m needs to be repaid or refinanced before the end of this calendar year.

The company has been considering appointing administrators since at least last Tuesday.

As time ran short for the airline, Queensland offered it $200m if it kept its headquarters in Brisbane. Virgin’s Bowen Hills headquarters has 1,200 workers and there are 5,000 Virgin employees in Queensland.

But NSW treasurer, Dominic Perrotet, told Sky News on Sunday night the NSW government was considering offering support and pointing to the second airport being built at Badgerys Creek.

“Virgin should have their headquarters for both Virgin and Tiger in Sydney,” Perrottet said.

The NSW premier, Gladys Berejiklian, confirmed her state’s interest on Monday morning.

“If there are other opportunities [where] the NSW government can support businesses retooling or looking at other opportunities to set up their head office here in NSW, we are open to all of those things.”

NSW is expected to release a statement once Virgin makes an announcement to the ASX.