While the overtures of British Airways towards low-cost carrier Norwegian drew to a nought, it seems one of their neighbours are having more success with M&A. It has just been announced that WOW Air, the low-cost carrier based out of Iceland, is being acquired by Iceland’s flag carrier Icelandair for about $18 million.
The transaction will be an all-stock transaction, and WOW Air shareholders will get about 5.4% of the stock pool of Icelandair after the deal closes. The companies will continue to operate with their brands even after the acquisition.
Remember, WOW Air has been struggling for a while now. They had grown massively and now had to start consolidating their route network. The airline had cut away from 5 stations in the USA in the coming days.
What happens next?
Iceland Air and WOW Air don’t have much to write home about except having a tremendous geographic presence and mostly low fares. They command about 4% of the trans-Atlantic market between them. There is only so far that contention for dominance would have gone. For now, I imagine this would mean competition would become lesser, and ‘synergies’ would start coming out of the route network. A codeshare may not be out of the window either. However, I am not sure if Iceland has any competition commission which may rule against this deal for fear of a monopoly.
That should also mean Icelandair, which was planning to come to India or at least having the thoughts, may not come over after all. Will this impact the upcoming flight to Delhi or not? I don’t think so. I think they will at least start the route and then see where it goes from there.
What do you think of the deal where Icelandair is acquiring WOW Air? Cheap fares anymore?