Last week WOW Air finally collapsed. The Iceland-based airline was founded in 2011, and their business model has been based around connecting people between North America and Europe via their hub in Keflavik, Iceland.
Why the airline failed depends on who you ask. If you ask the pilots, it’s the fault of journalists. If you ask the CEO, it’s because they made the mistake of ordering A330s. If you ask most people, it’s simply because the overall business model didn’t make sense given the competitive landscape.
It sure felt like WOW Air was holding on longer than they should have, as the writing was on the wall for their collapse for quite a while.
But that’s not stopping former WOW Air CEO Skúli Mogensen from trying to resurrect the airline. I guess he’s one of those people who subscribes to the “you can’t lose if you don’t quit” mentality.
As reported by Iceland Monitor, the former WOW Air CEO is looking for 40 million USD to be able to resurrect the airline, and in return he’s offering a 49% stake in the company.
As before, the company would be based on a low cost model, though their approach would be a bit different:
- They’d initially operate charter flights using five Airbus aircraft, as a basis for obtaining an operating certificate, and also for buying back major asserts from WOW Air’s estate, including the company’s trademark
- The plan is that WOW Air would expand much faster than previously, and they’d have seven Airbus planes in operation by next year; for the previous version of WOW Air, it took five years for them to get that many planes
Frankly I think the odds of this working are very low, and if someone did want to invest 40 million for a non-majority stake in an airline, I feel like there are better options than working with Skúli, who doesn’t exactly have an amazing track record.
I’ll be curious to see if anything comes of this…
I'm just here for the comments...the article's title had me at "please no!" LMAO
How to raise USD 40 million.
1. Find a large airline with a brand name and the perceived need to acquire a low cost airline as a subsidiary
2. Find a venture capital company with more money than brains
3. Put them together and hope for the best .
Baltia has better return rates lol :-)
@Adil, you beat me to the James Hogan crack! Lol, well done!
I’m sure they could get investment from the Italian government. It has been bankrolling a garbage airline for years.
We've already had 10 airlines shut down this year so far...does he want WOW to be listed more than once on that list?
Just because it's failed once, doesn't mean it will fail again. Numerous businesses have failed once then prospered the second time around.
I'm pretty sure you also didn't keep saying that the business model didn't make sense. In fact, I remember reading many articles about how great they are and how they had a good strategy - you only brought out the "doesn't make sense" line after their problems became widely reported. (Which isn't meant...
Just because it's failed once, doesn't mean it will fail again. Numerous businesses have failed once then prospered the second time around.
I'm pretty sure you also didn't keep saying that the business model didn't make sense. In fact, I remember reading many articles about how great they are and how they had a good strategy - you only brought out the "doesn't make sense" line after their problems became widely reported. (Which isn't meant as a dig, it's not surprising considering you just sit inside the planes and don't have any operational experience with airlines - you have no reason to be able to analyse business plans).
I paid $228 to fly EWR-KEF last October on WOW. They could've increased the price 50% and I still would have flown them. So yes, please resurrect the airline and give us Americans one more reason to avoid the big 3, even if just to Iceland and a few connecting cities in Europe...but price your tickets better so you actually make some money.
How is this different then selling WOW for $1 before the collapse. If they couldn't sell back then, I doubt it's going to work now.
By the way, I do think there will be takers for $1
@Mike
When place names are translated into English one does not usually keep foreign orthography, unlike the names of people where one usually does. The official ISAVIA website for Keflavik International Airport does not use “í” for either Keflavik or Reykjavik when set to English, while switching to Icelandic changes it to your preferred spelling.
What is hubris? See Skúli Mogensen
Is it that hard to spell Reykjavík and Keflavík correctly?
You can be bothered to spell Skúli's name correctly, yet you abandon the accented vowels in the former two. "i" and "í" are completely different letters in Icelandic. It's not Spanish.
Be consistent, please.
For 40 million I would want 99% of the airlines, with me making the decisions not him.
First, change the name to LOL.
With James Hogan as special adviser?
In this era of cheap money and ridiculous valuations (hello Lyft), I'll be more surprised if he doesn't find any takers for this.
Hilarious. There are bad business models and then there is Wow Air.
So when we will see Skúli on Shark Tank? ;-)
I like how they would expand rapidly. "I know we lose money, but we plan to make it up in volume."
From a business/economics perspective, it's not a dispositive factor that "the odds of this working are very low." While the odds of success probably are in fact low, the worst case scenario is limited by zero and the loss of the investment, while all other scenarios have a potential to create wealth that is massive in comparison. This is why there will always be entrepreneurial startups in aviation and other industries despite a graveyard littered...
From a business/economics perspective, it's not a dispositive factor that "the odds of this working are very low." While the odds of success probably are in fact low, the worst case scenario is limited by zero and the loss of the investment, while all other scenarios have a potential to create wealth that is massive in comparison. This is why there will always be entrepreneurial startups in aviation and other industries despite a graveyard littered with failed ventures.
They would probably have more luck trying to get Baltia off the ground than restarting Wow...
"If we just burn through cash FASTER we'll surely succeed this time."
Expand your failed business model rapidly... what could go wrong?
If I had 40 million to piss away, it would be worth more to actually piss it away than invest in this shame.