The company which had been selected to buy Prestwick Airport from the Scottish government has pulled out of the deal.
The airport was taken into public ownership in 2013, after facing closure following heavy losses.
Transport Secretary Michael Matheson has told MSPs that the preferred bidder – which was never named – “does not wish to complete the purchase”.
He indicated in a letter to Holyrood that the reason was linked to Covid-19’s impact on the aviation sector.
Mr Matheson said Scottish ministers would “reflect upon future options for the business”.
The Scottish government announced in June last year its plan to sell the airport.
Mr Matheson later revealed that bids for the state-owned airport were still being considered, despite a 4 October deadline having passed.
Last December, Prestwick Airport reported a “major improvement” in its financial performance in the previous 12 months.
Accounts filed with Companies House showed the Scottish government-owned airport cut its operating losses from £3m to £1m.
The story behind the Prestwick Airport sale
The Scottish government bought Prestwick Airport for £1 in November 2013 after its former owner, Infratil, earmarked it for closure following heavy losses.
Ministers said at the time that the deal would help protect the airport and safeguard thousands of direct and indirect jobs.
The government has since invested tens of millions of pounds in an effort to turn around its fortunes, including applying to carry out horizontal space launches from its 2,986-metre concrete case runway.
Ryanair remains the only scheduled passenger carrier at Prestwick but the airport is also used for transatlantic freight and for fuel stops.