A budget airline has cancelled all of its flights – leaving thousands of passengers in limbo and its move to London Stansted in the balance.

Icelandic Airline Wow Air announced it would be suspending all its flights.

The troubled firm was due to move its London Gatwick service across to London Stansted on Sunday – however it is unclear whether this switch will still go ahead.

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Wow Air is rumoured to owe around £150m and while talks with rivals Icelandeair seemed to provide hope for the firm – talks broke down earlier this week.

The airline issued a statement from Keflavik Aiport this morning which said: “Wow Air is in the final stages of finalising equity raise with a group of investors.

“All flights have been postponed until documentation with all parties involved have been finalised.

“All passengers have been informed via text message/email to the contact details listed in the booking.

“Passengers scheduled on flights to/from Iceland with WOW air on Thursday 28 March are entitled to cancel their reservation for a full refund or change their reservation to the next available Wow Air flight.

“Wow Air apologises for the disruption to travel plans.”