Update: WOW Air has ceased operations, and all flights have been canceled. Icelandair is offering discounted tickets to passengers stranded by WOW.
WOW Air is fighting to stay alive, though I’m not exactly sure to what end.
On Sunday night we learned that WOW Air seemed to basically be out of options:
- In November 2018 it looked like Icelandair would acquire WOW Air, though that deal ended up falling through
- After that, Indigo Partners (which has invested in quite a few airlines) signed an agreement in principle to invest in WOW Air; just a few days ago it was announced that this deal fell through
- WOW Air announced that they were back in discussions with Icelandair, and that the parties hoped to conclude negotiations by Monday, March 25, 2019
- On Sunday Icelandair announced that they had concluded talks with WOW Air, and didn’t intend to move forward
The airline has a lot of debt, limited cash, and it was reported yesterday that one of their planes was even being repossessed.
As I explained, with no potential investors and limited cash, WOW Air would need to find an investor very quickly if they had any chance of survival. Well, the airline now has an update:
Reference is made to a market announcement of WOW air (“WOW“), dated March 24 2019, regarding WOW air’s advanced discussions with bondholders about voluntary restructuring including an agreement of converting current debt into equity.
Bondholders have formally approved to convert their bonds into equity and formal discussions with investors have commenced to fund the company. This is an important milestone in financially restructuring the company and secure the long-term sustainability of WOW air.
So it would appear that WOW Air bondholders have approved a plan to convert bonds into equity, and supposedly formal discussions with investors have commenced to fund the company.
While this is most definitely a step in the right direction, I still don’t see a viable direction forward for the airline. Indigo Partners has worked with some desperate airlines, and Icelandair wanted to take over WOW Air but said they were in too bad of a situation.
Even with this lifeline, I still don’t see WOW Air’s path forward.
We’ll have to see how this unfolds…