Icelandair Group on Thursday scrapped a plan to acquire its Icelandic rival WOW Air, calling into question the next steps for the struggling budget carrier.
Icelandair said the conditions for the share purchase were "unlikely" to be filled by the company's shareholder meeting, slated for Friday.
"This conclusion is certainly disappointing," said Icelandair Group's interim president and CEO Bogi Nils Bogason in a statement. "We want to thank WOW Air's management for a good cooperation in the project during recent weeks. All our best wishes go out to the owners and staff of the Wow Air."
WOW Air's flights first took off in 2012 and it has expanded rapidly, adding trans-Atlantic service from a host of U.S. cities. The airline is a no-frills budget carrier, that offers low airfares, some below $100 one way, and charges passengers for everything else, such as seat assignments, carry-on baggage and food and beverages.
But WOW Air said it has faced escalating financial problems since its bond issuance in September, including higher fuel costs.
Aircraft lessors and the company's creditors have "demanded stricter payment terms than before, putting further pressure on the company's cash flow," WOW air said in a statement on Tuesday.
The airline reduced its fleet by four planes earlier this week.
WOW Air's CEO Skuli Mogensen was not immediately available for comment but said in a statement that it "was clear at the outset that it was an ambitious task to complete all the conditions of the share purchase agreement in this short period.
"We thank the Icelandair Group's management team for this challenging project, and also wish the management and staff of Icelandair Group all the best.
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