Icelandic Bank Loses Millions in Airline Bankruptcy

Primera Air, a Denmark-based airline owned by Icelandic businessman Andri Már Ingólfsson, has filed for bankruptcy and ceased operating, RÚV reports. Arion Banki has lost the equivalent of millions of US dollars in the venture. The sudden collapse on Monday left passengers stranded on both sides of the Atlantic. The airline had closed several routes last month, but gave no notice of its complete shutdown. The airline blames market conditions and delayed delivery of new aircraft for its closure.

The carrier began operating as a charter service for tour companies. It was attempting to imitate WOW Air’s low-cost/long-haul model, but an industry analyst told the BBC that it had grown far too fast. The airlines small fleet could not adequately service its many new routes.

The cheap, long-distance airline has been in trouble for at least a year. Increased competition, rising oil prices, and other issues have rocked the industry. Monarch Airlines closed in an equally dramatic and sudden way 364 days earlier. WOW Air looked near-death until last month, when it found 60 million USD in investors. Norwegian Air Shuttle has also been struggling. Iceland’s legacy airline, Icelandair, has been losing large amounts of money and is now shifting to WOW’s business plan.

Arion Banki has been involved with Primera for many years and has lost 1.5 Billion ISK (13.3 million USD). Andri is not the first Icelandic businessman to bankrupt his company and cost the bank large sums of money this year. At the beginning of the year, Arion lost large sums in the bankruptcy of United Silicon. Arion Banki is currently Iceland’s only privately-owned and operated commercial bank.