Icelandair has scrapped its all-share deal to buy WOW Air that had aimed to create a stronger international competitor.
"The planned acquisition of Icelandair Group of WOW Air will not go through," Bogi Nils Bogason, interim president and chief executive of Icelandair Group, said in a statement.
Icelandair announced in earlier this month that it had agreed to buy its Icelandic rival and had said conditions for the merger would need to be met by Friday November 30, when its board was expected to recommend the merger to shareholders.
Icelandair, which did not give details about the conditions, said it had cancelled the plan because those terms were unlikely to be met by Friday's deadline.
"An Ambitious Task"
Skúli Mogensen, the CEO of WOW Air, which has been reducing the size of its fleet, said, "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."
Both Icelandic airlines use Iceland's Keflavik Airport as their main hub between Europe and North America. Together they have a combined 3.8% share of the transatlantic market.
Icelandair has lowered its guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) twice in 2018.