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The Fox/Lew syndicate, Tesna, today issued a statement confirming it withdrawn less than 48 hours before the midnight February 28 deadline set by Ansett administrators, Andersen.
The administrators, involved in late night talks with Tesna, had yet to comment this morning.
In a statement released at 9am (AEDT), Tesna blamed the collapse of the deal on issues principally related to third parties, including the transfer of domestic airport terminal leases.
"Discussions have taken place with the administrators concerning options for resolving the outstanding issues and finalising the sale," the statement said.
"In the light of those discussions and in consideration of our advice, we have reluctantly reached the conclusion that the sale agreement is not capable of completion and that the process involving Tesna and the administrators cease."
Lew and Fox said they had been completely committed to the purchase but, for a range of reasons, "this was now impossible to achieve".
"We have spent the past five months doing little else but working towards the finalisation of the Ansett purchase," they said in the statement.
"We have committed an enormous amount of resources, our professional advisers have worked tirelessly, but the obstacles and hurdles we have encountered from a range of parties have had the effect of consuming both resources and time."
It was not immediately clear what effect the decision would have on Ansett flights, which appeared to be going ahead as normal this morning.
However Qantas said earlier this morning it was drawing up contingency plans in case the Ansett deal collapsed ahead of the busy weekend, which includes the Australian Grand Prix and CHOGM meeting.
ACTU secretary Greg Combet said the decision was a tragedy. "So that means where we stand at the moment absolutely no jobs that can be saved in Ansett. It's a tragedy," he told ABC radio.
Unions said Ansett staff were "very distressed" at today's news. Combet said unions would be extremely angry at the Fox-Lew decision, but he was satisfied unions had done all they could to help the sale go through.
"We negotiated everything, productivity improvements, changes, new agreements, protected entitlements, we agreed on job numbers - we've done everything to try and make this thing work, so it's a tremendous blow," he said.
"We would not have done a thing differently. It was the right thing to do to set out and save the jobs in the airline and protect people's entitlements and that's what was done.
"You can only save the jobs if you find a buyer." Lew and Fox said their greatest disappointment was for the Ansett employees.
"Whatever we feel about the outcome from a personal and business perspective is completely overshadowed by our regard and disappointment for Ansett's people."
The Tesna statement said contract requirements for the transfer of domestic terminal leases for Sydney, Brisbane, Melbourne, Adelaide and Perth to Tesna could not be finalised in time.
In addition, serious issues had yet to be resolved, including environmental risk and the use of Ansett's IATA designator code.
