WOW Air’s continued existence is now in a state of uncertainty, and even Iceland’s Parliament is exploring their options for how to save the airline.
Talks between Icelandair Group and WOW Air over a possible takeover broke down last Sunday, leaving the future of Iceland’s budget airline uncertain. Kjarninn reports that the airline is in arrears to lenders, and needs at least five billion ISK (40 million USD) to remain operable. Where this money will come from is still unclear, but there are some options on the table.
Shareholders in the airline have offered to pay down this debt by becoming 49% owners in the company. While efforts are being made to strengthen the company’s financial position by reducing debt—that is, by converting it into equity—and raising funds for operations, time is of the essence. The start of the new month is coming up this Monday, and the company will have to pay out hundreds of millions of krónur in the form of salaries and other obligations at that time. Stundin reports that amongst WOW Air’s creditors is Isavia, the company which owns and operates Keflavík International Airport, and Arion bank.
WOW Air has been in serious financial trouble for months now, with possible buyouts from Icelandair Group and Indigo Partners, the investment group which runs budget airline Wizz Air, both coming to naught. Minister of Finance Bjarni Benediktsson told reporters that the government has been following developments closely, and is ready to respond if operations cease. That will likely not, however, include a government buyout.
“I have said publicly many times that I do not think it is justifiable to put tax money into a risky business such as this one,” Kjarninn reports Bjarni saying. “And it is not a part of our plans to do anything of the sort.”
RÚV reports that there have been flight cancellations at WOW Air, with other flights still in a state of uncertainty. Those who have flights booked with WOW Air would do well to contact the company to check the status of their flights.
Even if the shareholders’ plan to buy a 49% stake in the company to pay down part or all of WOW Air’s debt comes to fruition, a buyer or buyers from the remaining 51% is still a mystery. If such a buyer is found, RÚV reports, that potential owner would have to negotiate with company shareholders and not necessarily with WOW Air CEO Skúli Mogensen.
With no government buyout in the cards, no known majority stake owner on the horizon, and a new wave of operational costs coming on the first of the month, the future of WOW Air is far from clear.
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