Icelandic airline WOW air has suspended operations after it has failed to secure new funding.
The announcement was made on the WOW air website at around 08:00 GMT on Thursday 28 March 2019.
For the avoidance of doubt, WOW air should not be confused with Wizz Air which flies principally from London Luton to Eastern Europe.
WOW air was founded by Skuli Mogensen in 2011. It engaged in an aggressive expansion to capture connecting traffic between North America and Europe, with the ambition to be the “Dubai of the North Atlantic”. It has to be said this never quite made sense. Many of the city pairs it offered were already served by direct flights and there were already ample one-stop connections between Europe and North America.
WOW air was catching up Icelandair in terms of market share at Keflavik airport. However, aggressive fare competition and expansion had hit its yields. It had no fuel hedging strategy. A plan to raise $200-300m in an Initial Public Offering had been abandoned. WOW air has also suspended a very large number of transatlantic routes, some a matter of months after launch.
Last year, Icelandair announced it was to buy WOW air in all share transaction which valued WOW air at around $18m. However, this was abandoned.
WOW air announced last November that it had reached an agreement in principle for an investment from private equity firm Indigo Partners LLC. However, it announced on Thursday 21 March that Indigo Partners had withdrawn its interest. Talks with Icelandair were to resume with a deadline of Monday 25 March. However, WOW air announced on Sunday 24 March that these had been ended without agreement. WOW air issued a second announcement on Sunday that it was to enter into discussions with bondholders and creditors on a restructuring which could include a debt for equity swap. Whilst bond holders had agreed to this, it was clearly not sufficient.
Advice for passengers
The Civil Aviation Authority is not responsible for regulating WOW air. However, general guidance is available on its website.
The Icelandic Transport Authority has also issued a statement with general guidance for passengers.
For passengers who have purchased flights that have been cancelled, the best advice is to contact your credit company for a refund.
In the absence of any official rescue effort co-ordinated by the Icelandic Government, rival airlines may also announce “rescue fares” for passengers who are mid-way through their journeys in the coming days.