"I'm not going to call it anything else until the courts give an opinion."
The government, which has stepped in to charter aircraft and find seats with other airlines to take Air Madrid's passengers, said it was seeking compensation from the airline.
Alvarez said: "We are going to claim indemnities ... We are going to fight with all the legal and judicial means possible."
The development ministry said it was withdrawing Air Madrid's licence. It had kept a close watch since May on the airline, which had become infamous for its two-day delays and constant technical problems.
Inspectors have grounded five of Air Madrid's seven planes on seven different occasions for failing to meet safety standards, the minister said, stressing that no planes had been allowed to fly while unsafe.
Many of the passengers left stranded by the airline are Latin Americans or Romanians working in Spain.
Some of those waiting at Madrid's Barajas airport were distraught, saying they had paid thousands of euros to go home and see their families, some for the first time in years.
The ministry has found return flights for 5,000 passengers so far. It urged passengers with tickets to contact ministry call centres (www.fomento.es
) for help.
Alvarez said: "The company has the obligation to provide services for which it has taken payment in advance."