The Iceland Stock Exchange temporarily halted trading on shares of Icelandair, by request of the Financial Supervisory Authority (FME), RÚV reports, casting doubt on a WOW Air buyout. As it stands now, whether or not Icelandair Group, the company which owns Icelandair, will be able to fulfill all the conditions of the buyout has been called into question.
According to an FME announcement, trading was halted on Icelandair shares “to protect the equality of investors”. While trading resumed at 12:30 this morning, Icelandair Group issued a statement to the Icelandic Stock Exchange that they consider it unlikely that they will be able to fulfill all the terms and conditions of the WOW Air buyout before this Friday’s investors meeting, when the purchase will be voted on.
Icelandair Group announced the intent to buy out WOW Air earlier this month, but that purchase was still dependent upon approval from Icelandair shareholders and the Icelandic Competition Authority.
The involvement of the Icelandic Competition Authority is critical. Between the two airlines, their combined share of air traffic to and from Iceland is nearly 80%, with the buyout giving Icelandair Group control of the vast majority of flights to and from Iceland.
As reported, WOW Air has struggled with significant financial losses, even while growing its market share. With the combination of the two airlines, WOW Air may add more destinations to its roster, with the help of Icelandair’s resources.
All that hangs in the balance now, as Icelandair Group works to find a way to fulfill the terms and conditions of the buyout in a timely manner.