Indigo Partners, a fund owning and investing in several low-cost carriers around the world, has signed an agreement in principle with WOW air (Reykjavik Keflavik) regarding an investment in the Icelandic LCC.

Terms of the agreement were not disclosed, other than the fact that CEO, founder, and majority owner at this time, Skuli Mogensen, would remain a "principal investor". The transaction is yet to be finalised after Indigo Partners will have conducted due diligence.

"Skuli and WOW's management and employees have done a remarkable job in creating a well-regarded, successful ULCC brand. We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision," Managing Partner of Indigo Partners Bill Franke said.

Indigo Partners stepped in just a day after talks with Icelandair Group broke down. The Icelandic flag carrier said it deemed certain conditions set out in the mid-November investment agreement "unmeetable".

The US-based fund is already a significant shareholder in Wizz Air (W6, Budapest), Frontier Airlines (F9, Denver International), Volaris (Y4, México City International), and JetSMART (JA, Santiago de Chile). Earlier this year, Frontier and Volaris launched the world's first ULCC code-share partnership.

Financially ailing WOW air recently returned two A320-200s and two A330-300s to the lessor.