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Eleventh hour talks have been instigated between Wow Air and rival Icelandair after a potential investor withdrew interest in the budget carrier.

US private equity firm Indigo Partners, which has stakes in a number of airlines including Wizz Air, had been in negotiations with Wow Air to invest up to $90 million since November.

Negotiations had already been extended by a month to the end of March after the parties could not agree terms.

But Wow Air said last night: “The proposed investment of Indigo Partners LLC in Wow Air has been cancelled by Indigo Partners.

“Therefore, all negotiations between Wow Air and Indigo Partners have been cancelled.

“Subsequently Wow Air has started discussions with Icelandair Group. The parties aim to conclude the negotiations by Monday March 25, 2019.”

Icelandair said: “Following the announcement from Wow Air on the end of negotiations with Indigo Partners, Icelandair Group’s board of directors has agreed to start discussions with Wow air regarding Icelandair Group’s involvement in its operations.

“The discussions will be based on the doctrine of competition law regarding the failing firm defence. The discussions will take place in cooperation with the Icelandic authorities.

“The goal is to conclude the discussions on Monday, March 25, 2019.”

Competition concerns are expected to be allayed by the “failing firm defence”, suggesting Wow Air was in danger of going out of business, the Financial Times reported.

Icelandair had been in discussions about a takeover of Wow Air late last year, but the deal fell through.

Wow Air has announced that it is moving its London-Reykjavik service from Gatwick to Stansted from April 2.

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