LONDON – In another sad twist for the Icelandic low-cost carrier, Icelandair has confirmed it is no longer interested in conducting any further talks relating to a possible takeover of rival carrier Wow Air.
The low-cost airline had been engaged in advanced discussions with low-cost carrier investment group Indigo Partners on the potential of a takeover.
Wow Air failed to meet the conditions set by Indigo partners, and further talks were suspended, leaving the airline searching, yet again, for investment to secure its future.
This past week has seen a series of key setbacks which could well be the final straw for Wow Airs low-cost operations.
On Thursday 21st March 2019 Wow Air revealed in a statement that any possibility of a takeover by Indigo Partners was off.
”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.”
As any prospect of a takeover bid by Indigo Partners disappeared, Wow Air looked to Iceland’s flag carrier Icelandair for a second time, asking for yet another lifeline.
Any optimism that Icelandair would be interested in another round of takeover talks were dashed on Sunday, March 24th, when in another statement Wow Air stated:
”Icelandair Group has decided that its possible involvement in WOW air’s operations, as announced on 20 March 2019, will not materialize. Therefore, all discussions between the parties have been cancelled.”
A bleak future
Whilst it can be easy to speculate as to what the future will hold for Wow Air, the facts surrounding their current situation do not lie.
The airline launched an ambitious programme which saw a raft of new flights to the USA launched, with the opportunity for travellers from Europe flying via their hub in Reykjavik at a lower fare compared to the legacy carriers plying such routes directly to the USA from Europe.
Difficulties seemed inevitable as the airline then went on to order newly built Airbus aircraft in the form of A320/21 NEOs as well as widebody A330 NEOs, with the sole intention of growing their network and adding capacity wherever it was needed.
However, the launch of well-publicised new routes to India, Israel and the west coast of the USA did little to dampen the low-cost carrier’s ambitions.
The latter end of 2018 saw the airline began a major restructuring
As the airline seeks to focus its attention back to its core European routes, questions regarding the long-term future of Wow Air constantly crop up.
Wow Air creditors meet to decide airlines future
Following the news Icelandair had pulled out of talks on Sunday 24th March, WOW air Bond Holders and other creditors of WOW air have begun advanced discussions with the aim of reaching an agreement on a voluntary restructuring of the airline, part of which would be including an agreement in converting Wow Air’s current debt into equity and fund the company towards some form of long term sustainability. Further information will become available on Monday.