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U.S.-based private equity fund Indigo Partners said it has agreed to invest in low-cost carrier WOW air after Icelandair (ICEAIR.IC) scrapped its plan to buy the privately-held airline.

The private equity firm managed by Bill Franke, the veteran U.S. low-cost airline investor, also has made investments in U.S.-based Frontier Airlines, Mexico’s Volaris, Chilean carrier JetSmart and Hungary’s Wizz (WIZZ.L).

The terms of the Wow air transaction were not disclosed.

“We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision,” Bill Franke said in a statement.

WOW CEO and primary shareholder, Skuli Mogensen will remain a principal investor in WOW upon completion of the deal.

Wow air has been reducing the size of its fleet and had said its cash flow was under pressure due to stricter terms from creditors and lessors.

In a separate statement on Friday, Icelandair stated: “Initial findings showed a larger cash flow deficit than previously assumed and other issues.” Icelandair said these issues related to the conditions for the deal to proceed, such as satisfactory due diligence.

Icelandair also said negotiations were not concluded on several issues relating to the deal. Icelandair said on Nov. 5 it had agreed to buy its Icelandic rival provided certain conditions were met by Friday, when its board was expected to recommend the merger to shareholders.

The company then canceled the deal because it said those terms were unlikely to be achieved by the deadline.