Trouble Icelandic carrier WOW Air is running out of options for future financing, after their last hope of investment pulls out. Icelandair have stated ‘all discussions have ended’, leaving WOW Air with no more buyers in the pipeline. With dozens of flights cancelled today and widespread concern that they’ve reached the end of the road, Simple Flying asks, what’s next for the struggling carrier?
Despite a deal with Indigo Partners almost reaching the very end, the investor pulled out at the very last minute. As a result, Icelandair Group were back in the running to acquire the WOW Air. However, it seems these talks have also broken down, and Icelandair are no longer interested in a takeover deal.
On Sunday evening, the group announced:
“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 ended.”
With very few options remaining for the Icelandic carrier, what hope do they have of continuing into the future?
Why did Icelandair pull out?
It seems that, once again, no agreement could be reached between the two Iceland based companies. The same outcome happened last year, when Icelandair went as far as to sign a purchase agreement for WOW, but then abandoned it a few weeks later.
Chief Executive of the Icelandair Group, Bogi Nils Bogason, commented further on the decision, saying:
“The financial position and operations are such that we did not see any reason to continue.”
This suggests that finances at WOW Air are possibly more dire than previously thought. With no buyers left on the table, the future of the company is looking fairly bleak.
What are WOW Air doing?
The company had already taken some steps to cut costs and reduce liabilities. They sold four of their A321s to Air Canada, liquidizing around $12m, and moved flights from the expensive Gatwick airport to the more affordable Stansted. They’ve even tried offering flights from the US to Iceland for as little as $45, but it seems that none of this is enough.
Now, they are endeavoring to restructure the company, including turning debts into equity and exploring other financing mechanisms.
In a statement on their website, WOW Air said:
“A majority of WOW air Bond Holders and other creditors of WOW air are in advance discussions with the aim of reaching an agreement on a voluntary restructuring including an agreement of converting current debt into equity and fund the company towards long term sustainability.”
The announcement has stated that more information will be given today. Simple Flying are keeping a close eye on proceedings to see what’s next for WOW.
Just this morning, WOW have begun to cancel dozens of flights, some at incredibly short notice. A 09:30 flight from Gatwick to Reykjavik was cancelled just hours before it was due to fly, and others have followed throughout the day.
The move has left many passengers stranded, with hordes of them taking to Twitter to vent their frustrations.
@wowairsupport I was supposed to fly out at 10 this morning and get text at 12.30am to say flight cancelled… still no reply. Disgusting!
— berni smith (@puglet1011) March 25, 2019
@wowairsupport cancelled our flight this morning, without trying to contact us at all. Having to wait at the airport for 8 hours for our next flight with no food/compensation or anyone to help. Sort it out!!!!
— LucyMoore (@LucyaMoore) March 25, 2019
@wowairsupport flight cancelled 6:20pm today with no contact from airline. Had to rebook onto another flight with another airline as only alternative flight in 2 days time. No help on reimbursement of food/flight – improvement to customer service needed immediately – please help.
— Amy Belletty (@amy_belletty) March 25, 2019
In all cases, WOW Air support gave the same reply:
Thanks for writing. We sincerely apologize for the disruption to your travel plan and the inconvenience this has caused you. Kindly DM your booking code for assistance 👉 https://t.co/hJXPE66BDT
— WOW air Support (@wowairsupport) March 25, 2019
According to the WOW Air website, at least 20 flights have so far been cancelled today. We await to hear what’s next for the struggling carrier.