A major airline has announced its sudden closure and cancellation of all flights. Icelandic low-cost airline Fly PLAY announced this morning that it has ceased operations.

In a statement on its website, the airline wrote: "Fly PLAY hf. has ceased operations, and all flights have been cancelled...We kindly advise you to check flights with other airlines. Some carriers may offer special 'rescue fares' considering the circumstances".

The airline said: "We are deeply sorry for the disruption this causes and thank you for your understanding".

The budget carrier is based at Keflavik International Airport and has only been operating for four years. Its routes included Baltimore, Boston, London, Lisbon, Madrid, Paris and Alicante.

Fly PLAY told customers who purchased a ticket with a credit card should contact their card issuer for a refund.

Those who booked tickets as part of a package deal via a travel agency in the European Economic Area should contact their travel agent for help, according to the airline.

Set up in 2019, PLAY started out with six destinations in Europe, with plans to expand its fleet to 10 jets inside three years.

Icelandic news outlet RUV reported that 400 airline employees would lose their jobs as a result of Fly PLAY's ceasing of operations.

A statement attributed to the airline by RUV said operations at the company had "long gone worse than hoped" and ticket sales fell after negative media coverage. Policy changes had also provoked "discord" among some of the company's staff, according to a translation of the statement published on RUV's website.

The statement said changes to the airline's business model introduced last autumn had given "considerable grounds for optimism".

It added: "Unfortunately, it is now clear that those changes cannot deliver results sufficient to resolve the deep-seated difficulties of the company which have accumulated...In light of the above PLAY ends its operations today (September 29)... On this occasion the board and managers of PLAY emphasize everything was tried so the outcome would be different.

"This decision is by far the most grievous in the situation and it is only taken in light of the fact that other ways were deemed exhausted. The board offers its sincere apologies to all those who suffer negative consequences because of this outcome."