Following on from the news that Indigo Partners could save struggling WOW Air, it seems as though the deal is one step closer. Media reports suggest that WOW has fulfilled all of the requirements set forth by Indigo Partners before finalising a purchase.
WOW’s deadline for securing a deal was today as set by shareholders. However, there is currently no news on whether an agreement was finalized. Following its financial difficulties, it does look like a deal may be likely as both parties are reportedly working on a final deal.
Wow’s Financial Difficulty
Wow’s problems started back in October 2018 when the airline began cancelling routes and returning aircraft. This is a classic sign that an airline could be on the brink of financial worries and has unfortunately been seen a few times recently.
It looked as though WOW’s fortunes had been turned around in November. On the 5th of that month, it was announced that Icelandair would be purchasing WOW, its low-cost competitor. Unfortunately, this deal fell through under a month later on the 29th of November. However, just one day later, Indigo Partners agreed to purchase WOW Air.
So Who Are Indigo Partners?
Indigo Partners is a private equity firm specialising in low-cost airlines. To that effect, they currently own or hold stakes in four airlines:
- Frontier Airlines of America;
- JetSmart of Chile;
- Volaris of Mexico;
- Wizz Air of Eastern Europe.
The group had expressed interest in WOW Air following the failure of the Icelandair deal. WOW air would almost perfectly fit Indigo Partners’ portfolio of low-cost airlines, and being a part of the group could prove to be a massive boon for the airline. Indigo Partners had asked WOW to fulfil some conditions before purchase would be finalised.
According to Iceland Review, these conditions set by Indigo Partners have now been fulfilled, paving the way for purchase talks. It was reported that these conditions included:
- Downsizing their fleet to 11 from 20;
- Cutting a number of destinations from WOW’s network.
As such, WOW’s passenger count is expected to fall to 2.1 million passengers this year, down from 3.5 million last year.
To achieve a desirable fleet size, WOW had to back out of a serious contract. The airline had signed a 12-year agreement regarding leasing 4 A330s from an Irish Firm. It is reported that WOW had to pay a sizeable fine in order to leave the contract,
Indigo Partners is now likely to purchase 49% of WOW Air. While reports suggest that today was the deadline for making such a review, Simple Flying has yet to see any evidence that the deal has been completed successfully. Indigo could purchase a greater share of WOW in the future.
What do you think of an investment in WOW by Indigo Partners? Let us know in the comments down below!