Icelandic low cost carrier WOW air has collapsed, ceasing operations and cancelling all flights.
The airline had earlier in the day halted flying while it attempted to agree funding. A message on the airline's website prior to the collapse said “WOW air is in the final stages of finalising equity raise with a group of investors. All flights have been postponed until documentation with all parties involved have been finalised.”
The talks on the debt to equity agreement fell through and the flight suspension was announced as permanent.
Passengers stranded by the airline's collapse have been offered rescue flights by other airlines including Icelandair, easyJet and Norwegian.
Some passengers may be entitled to compensation from the airline, as part of European regulations on air passenger rights. In case of a bankruptcy, claims should be made to the administrator or liquidator, the airline said.
WOW had been seeking finance for months as its trading position deteriorated. Icelandair agreed to a complete takeover late last year but cancelled the deal saying that some of the terms of the deal had not been met by an agreed deadline.
In late November, US investor Indigo Partners, which owns stakes in four airlines including Frontier, announced an in-principle agreement to invest, but that fell through too.
Last week talks were revived with Icelandair, but no agreement was reached and discussions ended on Sunday.
WOW used a fleet of Airbus A320-family aircraft to fly to destinations in Europe and North America. Its low-cost model operating single-aisle aircraft on longer routes allowed it to offer cheaper fares that most of its competitors, but with costs rising, especially on fuel, it was unable to continue as a stand alone airline.