WOW Air, the Icelandic low-cost carrier, is bankrupt. The news follows a failed acquisition by Indigo Partners, in addition to failed talks with full-service rival Icelandair. WOW has been facing financial difficulties for around five months now. In fact, the CEO of the company had to use his own money to prop it up at one point.
The last year has seen a number of high profile airline collapses, mostly driven by rising fuel prices and unfavourable exchange rates. They have been unable to compete in a market where ticket price is everything. At the start of October, we saw the bankruptcy of Primera Air.
Following this, just weeks later saw the demise of Cobalt, with Flybe almost following. The most recent airline bankruptcies were German low-cost airline Germania and UK regional airline FlyBMI. Now, WOW Air joins the list as a bankrupt airline.
WOW Air’s Troubles
The first hint of trouble within WOW Air arrived in mid-October 2018. The airline began to cancel routes with Simple Flying asking the question “Is WOW Air On The Brink Of Major Financial Troubles?”. This was confirmed when Icelandair entered negotiations to purchase WOW Air in early November.
Additionally, at the end of November when the Icelandair deal collapsed, WOW CEO Skúli Mogensen was forced to take action. While he injected €5.5 million of his own money into the airline, this, unfortunately, wasn’t enough to keep the airline in business. At the time he blamed the following on poor financial health:
- Bad publicity of WOW’s financial state;
- The collapse of Primera Air;
- Lessors and creditors imposing stricter terms;
- Surging oil prices.
Two failed acquisitions
There have been two failed acquisitions of WOW Air. The first, by Icelandair, fell through as WOW Air was not able to meet criteria set out prior to a shareholders meeting. However, almost immediately afterwards talks began with airline investment firm Indigo Partners. These talks came to an end last week. While things looked bleak, there was a glimmer of hope as Icelandair showed renewed interest in WOW, however, on Sunday it was confirmed that a deal would not happen.
What if I have flights booked?
Firstly, if you have flights booked with WOW Air, do not to head to the airport. Your flight will not take place as the airline has suspended all operations. WOW Air has told passengers to “check available flights with other airlines.” While also mentioning “Some airlines may offer flights at a reduced rate, so-called rescue fares, in light of the circumstances. Information on those airlines will be published, when it becomes available.”
Passengers are advised to contact their credit card issuer to see whether they may be able to get a refund on the flight tickets. Additionally, if flights are part of a package tour, they may be protected. Passengers in this circumstance are advised to contact their travel agent or tour operator.
Finally, some travel insurance packages have clauses for airline insolvency. If you have travel insurance booked for your trip, or an annual travel insurance plan, you should check to see whether you are protected in the case of airline bankruptcy. If this is the case, be sure to contact your insurance provider who will detail the next steps.
Have you been affected by the suspension of WOW Air flights? Let us know your story in the comments down below!