Stacy Boit,

Spirit Airlines is shutting down after failing to secure a $500m (£368m) bailout from the Trump administration.

The budget airline was in talks with the US government about a rescue deal that would have saved it from going out of business.

But discussions collapsed and the carrier said in an announcement on its website on Saturday that with “great disappointment” it had “started an orderly wind-down of our operations, effective immediately”. That included canceling all of its flights, stranding many passengers and workers.

Spirit was emerging from its second bankruptcy filing in recent years before the US-Israel war in Iran, but the resulting surge in jet fuel costs pushed it over the brink.

“All Spirit flights have been cancelled, and Spirit Guests should not go to the airport,” the company said in its statement posted early Saturday morning.

Passengers reported receiving messages about the cancellations, but some still arrived at the airport in the morning with their luggage. Spirit’s customer service is no longer available.

The airline said it would automatically process refunds for flights purchased through Spirit with a credit or debit card to the original form of payment, but a bankruptcy court will determine how to compensate those who booked flights using a voucher, credit or airline points. Those who used a travel agent should contact the agent, it said.

It also said it could not reimburse guests for emergency hotel stays or replacement flights.

In the statement, Spirit’s CEO Dave Davis said: “In March 2026, we reached an agreement with our bondholders on a restructuring plan that would have allowed us to emerge as a go-forward business.

“However, the sudden and sustained rise in fuel prices in recent weeks ultimately has left us with no alternative but to pursue an orderly wind-down of the company.”

Transportation Secretary Sean Duffy on Saturday, though, disputed that account, saying Spirit’s demise was not the result of fuel price increases, which are largely due to the war with Iran.

“Spirit was in dire straits long before the war with Iran,” Duffy said, citing the company’s multiple bankruptcy filings, in a news conference at Newark Liberty International Airport.

“Their model wasn’t working,” he added. “The war was not the impetus.”

The airline’s demise was so abrupt that it has left many ticketholders in the lurch.

One Spirit customer, Yash Kothari, told the BBC’s US partner CBS News that he didn’t learn about the airline’s shutdown until he arrived at Philadelphia International Airport for a flight at 05:45 local time (09:45 GMT) on Saturday.

“The email came in at 1 am, so I was unaware,” Kothari told the outlet.

Other US airlines – including Delta Airlines, United Airlines, American Airlines and Frontier Airlines – have stepped in to offer “rescue fares” to stranded Spirit customers.

A passenger who asked not to be identified told the BBC that she received a notification through Spirit’s app in the middle of the night, while she was on a short trip in Dallas, that all flights were being cancelled and the airline was shutting down.

“I honestly thought the app was being hacked or something,” the woman said. “And then I did some quick googling and realized it was real and realized I probably needed to immediately look for flights back home. I was hoping it would give me a leg up that a lot of people who were affected were probably asleep.”

Almost immediately, though, the situation began “looking pretty bleak”. She ultimately secured a ticket on Frontier for roughly $180 ( £132) compared to the $108 she had spent for her round-trip flight on Spirit.

“I feel a lot of sadness for Spirit employees. And a lot of sadness for what this whole situation implies for the middle class,” she said. “I realistically can’t afford to buy flights that might be cancelled and rescheduled.”

The BBC has verified the woman’s identity and flight purchases.

Fuel costs can make up as much as 40% of an airline’s outgoings, and airlines have seen the cost of jet fuel double since the US and Israeli strikes began at the end of February.

Savanthi Syth, airlines analyst at the investment bank Raymond James, said spiralling jet fuel costs in the wake of the Iran war had proved “the final nail in the coffin” for Spirit.

Speaking to the BBC, Syth said the operator had shied away from the radical overhaul it needed during a 2024 bankruptcy procedure.

Spirit had been in the process of making the changes it needed in its current bankruptcy process, scaling back the number of flights it was offering and aircraft it owned, she said.

But its ability to survive the year was in question even before the Iran war, Syth added.

“If it wasn’t for the fuel scenario, they would have been okay through the summer, beyond the summer I would have said it was still precarious.”

The International Association of Machinists and Aerospace Workers (IAM) union, which represents Spirit staff, said the news was “devastating for the thousands of airline workers who showed up every day and gave everything to keep Spirit Airlines in the air”.

“Our members on the ramp did not cause this failure; corporate mismanagement and poor financial stewardship did,” the IAM union continued in a statement. “Our members deserve answers and support.”

The IAM union said it would be providing additional support to its members affected by Spirit’s shutdown and urged the airline’s leadership and the bankruptcy court “to ensure that every worker receives the full severance, back pay, and benefits they are owed”.

Some airlines have been cutting flights and others have hiked fares to cope with the cost increases. At the same time, the head of the International Energy Agency (IEA) has warned Europe could run out of jet fuel in as little as six weeks.

At the end of April, Spirit had been confident its rescue deal with the Trump administration was to be finalised imminently.

But after that deal fell through, Trump on Friday told BBC partner CBS the airline had been offered “a final proposal” to keep it in business.

The earlier plan, which would have seen the US government take effective ownership of as much as 90% of the airline, faced stiff opposition from Wall Street, Capitol Hill and even a member of Trump’s own cabinet. Transportation Secretary Sean Duffy told Reuters a rescue would amount to tossing “good money after bad”.

Stacy Boit,

The United States says it will on Monday begin trying to free merchant ships stranded by Iran’s closure of the key shipping channel, the Strait of Hormuz, since the start of the war.

US President Donald Trump said “Project Freedom” was a “humanitarian gesture” and that any interference would “be dealt with forcefully”.

Some 15,000 US service personnel, guided-missile destroyers and more than 100 aircraft would be involved, US Central Command (Centcom) said, adding that the US blockade of Iranian ports would continue.

The move comes as the two countries observe a temporary ceasefire, which began on 8 April, and as they work on agreeing on a permanent peace plan.

However a senior Iranian official warned that any US attempt to interfere in the strait would be considered a violation of the ceasefire,

Iran’s military said it will attack any foreign forces if they enter the strait, “especially, the aggressive US army”.

Iran’s closure of the channel – which is crucial to oil exports from the Gulf – has seen fuel prices rise globally and also left thousands of sailors stranded on some 2,000 ships trapped by the blockade.

About 20% of the world’s oil and liquefied natural gas usually passes through the strait.

In Trump’s post on social media, he said “countries from all over the world” had asked the US if they could help free up the ships, describing them as “merely neutral and innocent bystanders”.

Trump added the operation will be made on behalf of the US, Iran and other Middle Eastern nations, without listing which countries. He did not provide further details on how the operation would be managed.

He also said that US representatives were having “very positive” discussions with Iran, and that those talks “could lead to something very positive for all”.

An estimated 20,000 sailors have been trapped in the Gulf since the start of the war with Iran. There has been growing concern over dwindling supplies and the effects on sailors’ physical and mental health.

The United Kingdom Maritime Transportation Operation (UKMTO) on Sunday reported that a tanker had been hit by an “unknown projectile” in the strait, adding that the crew were safe.

Also on Monday, the Pakistani government said 22 crew members from Iranian container ship Touska – seized by the US last month – will be “handed over to the Iranian authorities”.

The Touska was intercepted on its way to an Iranian port as part of the US’s blockade, with the crew evacuated to Pakistan.

Pakistan said the repatriation of the crew is “a confidence-building measure by the United States of America”.

Trump’s announcement came after Iranian state-linked media said Tehran had received a US response to its latest peace proposal.

Iran said the response, delivered via Pakistan, was being reviewed, according to Iran’s semi-official Tasnim news agency.

Iran says US has responded to its latest peace proposal

The US is yet to formally confirm it has replied to Iran. However, Trump reportedly told Israel’s Kan News on Sunday that the proposal was unacceptable to him.

Iranian state media said Tehran’s 14-point peace plan asked for Washington to withdraw its forces from near Iran’s borders and end its naval blockade of Iranian ports, and for all hostilities to cease – including Israel’s offensive in Lebanon.

It also called for an agreement between the two countries to be reached within 30 days.

Iranian state media added that the proposal urged the two warring sides to focus on “ending the war” rather than extending a current ceasefire.

Iranian foreign ministry spokesman Esmaeil Baghaei was quoted by state media as saying that “at this stage, we do not have nuclear negotiations” – a key demand by Washington.

Iran has repeatedly denied it is seeking a nuclear bomb and says its programme is only for peaceful purposes, though the country is the only non-nuclear-armed state to have enriched uranium at near weapons-grade level.

On Saturday, Trump confirmed that Washington had received the latest Iranian peace proposal.

In a post on Truth Social, he wrote that he would review the plan, but that he “can’t imagine that it would be acceptable in that they have not yet paid a big enough price for what they have done to humanity, and the world, over the last 47 years”.

Speaking to reporters later on Saturday, he said he had been told “about the concept of the deal”, adding: “They’re going to give me the exact wording now.”

Asked by the BBC about whether military strikes against targets inside Iran could be renewed, Trump said it was “a possibility”.

“If they misbehave. If they do something bad,” he said. “But right now we’ll see.”

The US president appeared disinclined to withdraw from the conflict entirely, saying “we’re not leaving” and “we’re going to do it, so nobody has to go back in two years or five years”.

The Iranian state-linked agencies said Tehran’s latest proposal was in response to a nine-point US plan, which envisaged a two-month ceasefire.