Because it was losing money
Its costs (notably the salaries of pilots, cabin crew and engineers) had grown so large over the years that it had become vulnerable to external economic factors. So vulnerable was Ansett that, in the end, no bang was required to knock it over - merely a whimper.
This was in large part due to the efforts of the various unions. Unions are supposed to look after their members but in all too many cases around the world (in not just airlines), it is their actions that ultimately put their members out of work. I am of course referring to the continuous upwards "creep" in pay and conditions.
It must have been great working there and being on the receiving end of those enormous salaries. I wonder how many realised the danger posed by those enormous salaries?
P.S. Great thread. A shame the original was locked as some photos were, I believe, just about to be posted.