The revival of WOW Air by a US investment consortium is looking less likely by the day. According to Icelandic press, the purchasing company has repeatedly failed to make an installment payment for the assets it wishes to purchase. As such, the liquidators of the bankrupt estate have canceled the sale.
Just weeks ago we reported on a potential resurrection plan for failed carrier WOW Air. This was not the Icelandic revival effort, loosely dubbed WAB Air (We Are Back), but the other, slightly stranger one from US businesswoman Michele Ballarin.
Reports at the time were that Ballarin along with Oasis Aviation Group, of which she is chair, wanted to purchase WOW Air’s former assets in order to launch a new startup. The airline would be an Icelandic company, owned 49% by the US partners, and would work on a Southwest Airlines type low-cost model, launching with three A321-200neos.
However, it now appears all plans are off as Icelandic news agency Morgunblaðið reports that the deal has been canceled. This is reportedly due to repeated failure by Ballarin and Oasis to submit payment for the assets.
In addition to valuable tools and a stock of spare parts for Airbus aircraft, the deal had included the sale of WOW’s brand name, air operation manuals and a number of other things specific to WOW Air. The value of the assets was pegged at $1.5m, which was to be paid for in installments over time.
However, following ‘repeated failure’ by the company to submit any payment, the agreement has been canceled. Þorsteinn Einarsson, one of the liquidators of the bankrupt estate of WOW Air confirmed to Morgunblaðið that the sale was off, saying,
“I can confirm that an agreement, which had been reached regarding the sale of these assets, has been canceled … We are, however looking into whether there is reason to negotiate a new agreement with those same parties.”
So the sale is off, but it’s not yet off-off. There’s still a chance that Oasis and Ballarin could renegotiate for the assets they want. However, she clearly stated when first expressing an interest in the airline’s assets that she’d already secured $85m in funding for the operation. Her failure to make initial payments is puzzling, to say the least.
What will happen to WOW Air’s assets now?
According to Icelandmonitor, the ‘other’ WOW Air revival project has shown interest in the assets. WAB Air – or We Are Back – are exploring the possibility of purchasing assets from the estate.
WAB Air is an initiative being led by two former directors of WOW Air, Arnar Már Magnússon and Sveinn Ingi Steinþórsson. Tied up with them is an Irish investment fund owned by the daughter of Kell Ryan, founder of Ryanair. Her business, Avianta Capital, will front up around $40m of startup capital in return for 75% of the business, with the remaining 25% owned by Neo, the property of the two WOW Air directors and two other unnamed investors.
Although WAB requires an additional $35m loan from the bank in order to get off the ground, out of the two potential purchasers, these guys seem to be the most serious. They’ve already begun the process of applying for an AOC, and with Avianta on board, have at least half the capital they need.
While the failure of Ballarin to carry through her intended purchase of WOW Air assets is disappointing, it could be a fruitful purchase for WAB, who are still confident in launching services as soon as this autumn.