Icelandair walks off WOW Air takeover

Earlier this month, I wrote about how WOW Air, which is in a terrible financial state, was on the verge of collapse and flag carrier Icelandair was going to scoop the airline for a song, essentially wiping off competition, and hopefully bringing back some sanity on the pricing originating from Iceland these days. In this all-stock deal, WOW Air would receive ~5% of Icelandair Group’s shares.

WOW Air to Delhi

But it seems it wasn’t meant to be. It seems Icelandair had conditions in their share purchase agreement which are not going to be completed before tomorrow, which is the day the Board of Directors of Icelandair would meet to consider ratifying the deal. As per the press release,

The acquisition of Icelandair Group of Wow air, based on a purchase agreement signed on November 5th, has been cancelled. Both parties agree on this outcome.

Icelandair Group hf. issued a stock exchange release last Monday, November 26th, stating that the company estimated that it would be unlikely that all of the conditions in the share purchase agreement would be fulfilled by the shareholders’ meeting on November 30th. That situation remains unchanged.
Therefore, it is unlikely that the Board of Directors of Icelandair Group can recommend to the shareholders that they agree to the purchase agreement. Furthermore, the Board does not intend to submit to the shareholders’ meeting a proposal to postpone decision-making on the purchase agreement.

Due to this this situation, both parties agree to abandon the aforementioned purchase agreement.
Icelandair Group will hold its shareholders’ meeting on Friday, November 30, as previously announced

Things at this point look not great at all for WOW Air. They just returned 4 aircraft to their lease companies for storage, which is the first step in closing out the lease. They have cut out a lot of flights out of the USA network already as well. The airline hopes to be able to meet their salary commitments tomorrow.

In the midst of all this, WOW Air plans to launch a flight to Delhi in the coming week. I am not so sure it is a brilliant plan at the moment. In September, WOW Air announced they hired Kiran Jain, who is ex-Air Asia to lead the India operations. On the other hand, some people tell me that this route is going to be killed come February 2019 already.

So, yes, this worries me no ends. I’m not booked on any of WOW Air’s flights at the moment, but if they survive this, I’m planning to get one of their $199 one-way fares without any extras to try out the low-cost long-haul model for the heck of it. Maybe I will buy the Butter Chicken too, because, why not?

What do you think will happen to WOW Air going forward?

 

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