WOW Air has ceased operations effective immediately, so all flights are canceled, and a lot of people are finding themselves stranded right now. Icelandair is offering discounts to passengers who have been impacted by the WOW situation.
The way the airline has gone abut this is bizarre. This morning the airline provided the following update:
WOW Air is in the final stages of finalizing equity raise with a group of investors. All flights have been postponed until documentation with all parties involved have been finalized.
Further information will be given at 9am.
Like, can you imagine the situation they must have been in to postpone flights by a few hours?
Well, it just recently became 9AM in Reykjavik, and the airline has updated their site to indicate that they’re ceasing operations:
WOW Air has ceased operations. All WOW Air flights have been cancelled. Read more here.
They haven’t updated their social channels, and there’s no “thank you for your support over the years,” or anything of the sort. Their travel alert page does have info on what you should do if you’re on an impacted flight, etc., though the advice they provide basically boils down to “tough luck.”
Unfortunately the ultra low cost transatlantic model just hasn’t panned out the way that many airlines had hoped. In the case of WOW Air, they never actually turned a profit, but rather were focused on growing market share.
I’m not sure if their long term strategy was just to be acquired, or if they had some delusional strategy to become profitable. However, over the past several months getting financing for operations like this has become more difficult, following several airline bankruptcies that we’ve seen in the past year.
For WOW Air things got really bad late last year:
- 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
- Then things got really bad, as one of their planes was allegedly repossessed in Montreal
- WOW Air bondholders approved a plan to convert their bonds into equity, but that only takes you so far
And today WOW Air did the inevitable… this ended up having quite a bad impact on Iceland’s economy.