The airline was grounded because Airbus (EADS) withdrew maintenance and support for it effectively resulting in its certification having to be withdrawn. This included, amongst other things not making spare parts anymore etc.
This meant that Air France and British Airways really had no choice but to withdraw it from service. They were involved in the discussions though in the end Airbus forced the end.
It wasn't as a direct result of the accident. It was cited as being a commercial and economic decision. Richard Branson offered to pay any sum to Airbus to keep them in the air but they refused.
Just to correct a few mis-conceptions about Concorde. It was actually incredibly profitable for both of the airlines over the last 10 to 15 years of its service life. This was for a number of reasons:
1) the cost of the airframes was written off by both AF and BA some time ago - in effect they never paid for the aircraft or assigned any value on the balance sheet for them. Therefore on paper at least, they made a mint from the service.
2) contrary to people's statement on this board, the yield per seat kilometer (profit per seat per km flown) was massive on concorde. partly because of the accounting above. Partly because it was also the most expensive per km - the cheapest restricted ticket was £5k.
3) at thos rates, BA flew 2 flights per day to/from NYC 7 days a week with further services like the winter Barbados flights. AF used to run charter services like "round the world" trips - it was one of these special flights that crashed in Paris. This way the aircraft were always generating money.
Granted it was not as commercially successful over it's whole service life as aircraft such as the 737 or A320 family. The fact remains that AF and BA would not have spent millions on retrofitting them after the crash to get them in the air again for just sentimental reasons - there was a commercial reason too. Also Concorde is the safest commercial aircraft having only had 1 accident.