Plans to sell-off Glasgow Prestwick have been grounded after the preferred bidder in the sales process pulled out.
The Scottish Government bought the airport on the Ayrshire coast in 2013 to prevent the facility from going bust.
Ministers pledged to return Prestwick to private ownership but initially struggled to attract commercial interest in the business.
Talks with a prospective buyer - understood to be AGS Airports - began last year but were stalled in April as lockdown upended the aviation sector.
Transport minister Michael Matheson today confirmed the sales process has now collapsed.
In a letter to MSPs, he said: "Covid-19 has impacted on the aviation sector globally.
"We have been advised that the company selected as preferred bidder does not wish to complete the purchase of the business at this time.
"Scottish ministers will reflect upon future options for the business."
Scottish Conservative transport spokesman Graham Simpson said: “It is disappointing that the preferred bidder for Prestwick Airport has pulled out but it’s not surprising.
“Scotland’s airports are in crisis as result of the pandemic.
“The SNP Government urgently needs to come up with a rescue plan for the entire aviation sector.
“They should start by allowing testing at airports in order to move towards a reduced quarantine period for passengers, which would improve the data we have, and improve confidence among passengers.
“We must also urgently hear from the SNP transport secretary how he intends to protect Prestwick.
“Thousands of jobs are dependent on all our airports succeeding and we need to see action now from the SNP.”
The Scottish Government paid a token £1 for Prestwick in November 2013 with the airport on the verge of going bust.
State intervention was deemed necessary to save as thousands of jobs, including many in aviation engineering, which are supported by Prestwick.
It was formally put up for sale in 2019 with ministers confident they could complete a sale by the end of that year.
But talks dragged on into 2020 and have now been sunk by the global downturn in the aviation industry caused by coronavirus.
The airport's most recent accounts show the business has racked up almost £38 million of cumulative losses since being taken into the public sector.
Loans adding up to £39.9 million have also been provided by Transport Scotland on behalf of Scottish ministers.
