Icelandair has backtracked on its proposed $25m (£19.6m) acquisition of budget airline Wow Air by mutual agreement, after signing the deal only earlier this month.
In an update to the Icelandic Stock exchange, the country's flag carrier confirmed the purchase agreement signed on 5 November has been cancelled.
It said that it would be unlikely that all of the conditions in the share purchase agreement would be fulfilled by the shareholders’ meeting on 30 November.
"Therefore, it is unlikely that the board of directors of Icelandair Group can recommend to the shareholders that they agree to the purchase agreement. Furthermore, the board does not intend to submit to the shareholders’ meeting a proposal to postpone decision-making on the purchase agreement," it said.
"Due to this this situation, both parties agree to abandon the aforementioned purchase agreement."
Bogi Nils Bogason, Interim president and chief executive of Icelandair, said: "The planned acquisition of Icelandair Group of Wow Air will not go through. The board of directors and management of both companies have worked on this project in earnest. This conclusion is certainly disappointing. 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. "
Skuli Mogensen, chief executive and founder of Wow Air, added: "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."