Takeover agreement between Indigo Partners and WOW Air stalls

FULL ARTICLE

Reykjavik - The future of the Icelandic carrier WOW Air faces again a question mark. The US airline investor Indigo Partners was to finalize an investment deal with the financially troubled airline on February 28, but no announcement yet as of March 4th.

Actually, the deal should be closed by February 28, but the sides couldn't reach an agreement yet. According to media reports, a leasing company demands high compensation for a canceled A330neo deal.

In 2018, the financial losses brought the airline to the edge of bankruptcy. A takeover plan by the rival Icelandair was cancelled at the last minute. Finally, the successful US airline investor Indigo Partners, who is behind Frontier, WizzAir, Volaris and previously Spirit Airlines, has offered a financial lifeline of $75 million to the Icelandic low-cost operator for a fresh start,

In the prospect of the financially strong partner, WOW Air suspended fleet renovation by cancelling some of its orders and reduced its fleet from 20 to eleven aircraft. 111 employees were dismissed and the route network was dramatically constricted.

Against 3.5 million passengers transported in 2018, WOW Air expects only 2.1 million passengers this year.

According to the Icelandic media, the biggest hurdle of the takeover is the leasing of two Airbus A330-300 and one A330-900, which was finalized in 2017 with Irish lessor Avolon over a twelve-year term.

In November 2018, WOW Air returned the two A330-300 to the Irish company and canceled the leasing agreement of the one A330neo before delivery.

Avolon now prepares to issue high contractual penalties for the unilateral cancellations by Icelandic carrier.