Update: WOW Air has ceased operations, and all flights have been canceled. Icelandair is offering discounted tickets to passengers stranded by WOW.
Iceland-based WOW Air has had a tough road the past several months. The airline has been growing like crazy but hasn’t turned a profit, and now the aviation industry is in an environment where that’s not good enough anymore.
In November 2018 it looked like Icelandair would acquire WOW Air, though that deal ended up falling through. A couple of weeks later it was announced that Indigo Partners (which has invested in quite a few airlines) had signed an agreement in principle to invest in WOW Air.
Everything sounded good, and Indigo Partners even confirmed their intentions to follow through with the investment.
In the meantime the airline has just become a small shell of its former self. The airline has returned all of their A330s, and also several of their A320 family aircraft. The airline has canceled a majority of their US route network, and this summer will operate just four routes to the US, down from over a dozen routes the previous summer.
Well, there’s now an update regarding Indigo Partners’ investment in WOW Air, and it’s not good.
Here’s the notice posted on WOW Air’s website:
The proposed investment of Indigo Partners LLC (“Indigo Partners”) in WOW air has been cancelled by Indigo Partners. Therefore, all negotiations between WOW air and Indigo Partners have been cancelled.
Subsequently WOW air has started discussions with Icelandair Group. The parties aim to conclude the negotiations by Monday March 25, 2019.
So Indigo Partners’ investment in WOW Air has been canceled, and the airline has “started discussions with Icelandair Group.”
We don’t know what happened between WOW Air and Indigo Partners, and we also don’t know how serious the talks are between WOW Air and Icelandair. I do find it interesting that they’re aiming to conclude talks by this Monday, which sure seems fast to me.
I guess we’ll have to wait and see how this plays out, though I can’t imagine it’s good news for WOW Air. At this point I’m frankly not sure what Icelandair has to gain from WOW Air, though I imagine an acquisition would also be really cheap.
What do you make of this situation?
Europeans are messed up.
There was BREXIT.
Now this is WOWXIT.
They nearly had a deal completed before, but WOW's ownership didn't want to restructure debt in order to make it happen. Now WOW is desperate, maybe they'll work a deal so they can get something out of it.
Well the fact that government of Iceland is involved so that could say something about the urgency.
We recently flew our 4th trip to Iceland on WOW, the 1st 3 on Icelandair. WOW was very nice as we enjoyed their seating options. We opted for XL seats w middle seat empty. Much more comfortable & much more affordable than business or 1st class of other airlines. I would definately fly them again for this reason. I hope they can remain in businees & offer this seating configuration to passengers!
It’s possible WOW has cut enough costs to make it palatable for Icelandair to acquire them. Though aside from assuming the debt I doubt they’ll pay anything, maybe a dollar (or the Icelandic equivalent). Then they can shut WOW down in an orderly manner and rebook (most of) the affected pax onto their own flights.
One huge benefit of this combo disappearing is that when Ben writes a headline with “Wow!” in it, we’ll know he’s not referring to this airline. :-)
I think this might be a case where Icelandair needs WOW as much as the other way around. Icelandair needs something to cover for the grounding of the 737 MAX, and the A320s and A321s WOW has could cover some of the gap.
Water and oxygen both are the life of a human being. But when wow started sell water we knew it will finish.
Wow, that was unexpected.
It's all just speculation of course but to me, it sounds like the original terms with Icelandair may have been too harsh to accept so they backed out and sought Indigo out for a better deal but it turned out worse so they are going back with hat in hand to Icelandair. That would also fit the short timeline needed. I think Icelandair would be the best fit. Actually Norwegian would have been the best but they have no money apparently.
Sounds like they need an investment ASAP or they're toast.
Icelandair was on the brink of acquiring WOW a few months ago, so they're already familiar with the details, so this shouldn't take long.
The fact that they aim to conclude the negotiations so quickly makes me wonder if there is some major pressing issue. Because that does indeed seem extremely quick for such a complex negotiation. (If only May would have hired these negotiators to handle Brexit) So I wonder if they have reached the point where they can not continue to operate without investment.