London (CNN Business) Icelandic budget carrier Wow Air has ceased operations and canceled its flights, leaving passengers stranded on both sides of the Atlantic.

The airline announced the closure in a statement posted to its website on Thursday. It advised passengers to book new flights on other airlines, and said some may be eligible for compensation.

Wow Air CEO Skúli Mogensen told Icelandic state broadcaster RUV that negotiations to save the airline went on until the early morning in Iceland. (See how the story unfolded in real time here .)

"As is normal, people believed we would get the investment," Mogensen told RUV. "We have been very transparent, but it didn't happen."

Mogensen said more than 1,000 passengers had been affected by the grounding of aircraft. He said he didn't have an exact figure on the number of tickets that had been sold.

Read More