LONDON — The Icelandair Group has scrapped its plans to acquire low-cost carrier rival WOW Air after both companies agreed it was the best course of action.
On the first week of November, the Icelandair Group had agreed to acquire the entire share capital of low-cost rival Wow Air.
Under the scrapped plans, both airlines would remain separate but under the same group’s umbrella. WOW Air shareholders would receive a total of 272,341,867 shares, or the equivalent of 5.4% of the group’s shares after the transaction had been completed.
But today, Bogi Nils Bogason, Interim President & CEO of Icelandair Group revealed that “The planned acquisition of Icelandair Group of Wow air will not go through.”
“The Board of Directors and management of both companies have worked on this project in earnest,” Boganson said. “This conclusion is certainly disappointing.”
The Icelandair Group had warned at the Icelandic stock exchange last Monday, November 26, that they felt like it would be unlikely that all the conditions required for the share purchase agreement would be fulfilled in time for the shareholders meeting, which is due to take place tomorrow, on November 30.
Because of this, it is believed that both WOW air and the Icelandair Group have agreed that the best plan of action is to abandon the aforementioned purchase agreement, putting in jeopardy the future of the disruptive low-cost carrier.
“We want to thank WOW Air’s management for a good cooperation in the project during recent weeks. All our best wishes go out to the owners and staff of WOW Air,” concluded Boganson.
What Next For WOW Air?
This announcement may affect dearly the already struggling WOW Air. The airline has already downsized its fleet by sending four planes to storage.
With the hope of getting a desperate cash injection from the Icelandair Grup, it is not known how extreme the knock-on effect will be today for the airline.
Skúli Mogensen, CEO, and Founder of WOW Air said that “It was clear that it was an ambitious task to complete all the conditions of the share purchase agreement in this short period.”
“We thank the Icelandair Group’s management team for this challenging project, and also with the management and staff of Icelandair Group all the best,” he said.
With this, only time will tell what the next course of action for WOW Air will be. The airline’s management will surely be looking to tighten its costs and reduce operations to guarantee minimum exposure and liability. However, the outlook is not bright for one of the world’s most disruptive and fastest-growing low-cost carriers.