Struggling Icelandic carrier Wow Air will halve its fleet and axe services in the New Year as talks continue on the terms of a rescue by US private equity firm Indigo Partners.

Wow Air will cut its fleet to 11 aircraft, grounding the wide-body Airbus A330s it uses on flights to the US West Coast, having already axed four of its previously 24-strong fleet.

The provisional rescue of the budget carrier by Indigo was announced at the end of November a day after Wow Air’s proposed takeover by Icelandair, announced earlier in the month, was called off.

Icelandair said it cancelled the takeover when the conditions could not be fulfilled in time.

Wow, which offers cheap transatlantic flights from Europe via Reykjavik, will cease flying to Los Angeles on January 19 and to San Francisco on March 19.

It will also axe New Delhi services, which only began this month, in January.

In a statement, the carrier said: “Wow Air is restructuring and simplifying its operations while discussions with Indigo Partners progress.”

Wow also began laying off some of its 1,100 employees and said contractors and short-term employee contracts “will not be renewed for the time being”.

Chief executive Skuli Mogensen said: “This is the most difficult day in the history of Wow Air. However, to ensure our future we must take these drastic measures.”

Indigo and Wow executives met in early December to discuss details of the investment, after which they announced: “Issues remaining include Wow’s planned network development, vendor contracts including aircraft leases and certain waivers from Wow Air´s bondholders.”

US-based Indigo Partners is a private equity firm with serial investments in low-cost carriers.

It was a lead investor in Tiger Airways in Singapore and Spirit Airlines in Florida, and maintains investments in Wizz Air, Frontier Airlines in the US, Volaris Airlines in Mexico, and JetSMART in Chile.

Indigo has said it could invest “up to $75 million” in Wow.