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Wow Air has had a rocky past few months, but now its demise seems imminent.

[Update, 3/28/2019: WOW Air has ceased operations. Find our ongoing coverage of WOW Air’s collapse, and what affected passengers can do about it, here.]

After quickly expanding to airports throughout the US, the Reykjavik-based airline had to cancel several routes from Iceland — including New York’s JFK, DallasSt. Louis, Cleveland, Cincinnati and Tel Aviv — due to low passenger demand. It seemed like Wow Air was going the way of other European budget carriers that have recently shuttered, like Primera closing shop in October. But at the eleventh hour, Wow found an unlikely savior: flag carrier and rival Icelandair offered to buy out Wow’s operations.

But Thursday morning brought bad news for Wow and its fleet of signature purple planes: Icelandair is backing out of the unofficial deal.

In a stock exchange release submitted on Monday but made public Thursday, both airlines said that the purchase agreement, which the carriers signed on Nov. 5, would not be fulfilled. The statement said that in the agreement there were several stipulations that Wow Air had to complete by the Icelandair shareholders’ meeting on Nov. 30 or the deal would not go through. And it seems Wow was not able to deliver on its end of the bargain.

“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,” Wow Air CEO and Founder Skúli Mogensen said in a statement. “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.”

Mogensen had hinted on Wednesday that the deal might not be going through, saying in a letter to the airline’s bondholders that the carrier is “working diligently to seek additional funding.” He also said he put 5.5 million euros of his own money into the bond to keep the airline funded a while longer.

The financial writing has been on the wall for low-cost carriers among the summer and fall’s surge in oil prices. Voices in the industry have stressed that more budget airlines will close due to the added pressure expensive jet fuel has put on their bottom lines. Wow pegged its likely closure to the recent high price of oil. “Last but not least oil surged to new heights in the weeks and months after our [bond] offering which at that time also put financial pressure on our financial outlook,” Mogensen wrote in the bondholder letter.

It’s not clear what conditions Wow Air had to meet to make the deal go through, but it’s safe to assume it was somehow related to financials or shoring up its balance sheet. It’s worth noting that earlier this week, the carrier reduced its fleet by 20%, returning four leased Airbus planes back to their owners.

“The planned acquisition of Icelandair Group of Wow air will not go through,” Icelandair’s CEO Bogi Nils Bogason said in a release. “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. ”

If you have a Wow Air booking, now would be a good time to check which credit card you used to purchase the flight and familiarize yourself with the card’s trip cancellation policies and other travel benefits.

Featured image courtesy of Wow Air

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