Wow Air that just in September had challenges selling bonds to finance its operations has hit turbulent skies again and returned four aircraft (two Airbus A330-300s and two A320s) to lessors.
The CEO has calmed down employees by promising that the company is able to meet the monthly payroll this coming Friday. He is blaming the worsened trading conditions after Primera Air went under and negative publicity for the more adverse outlook for the quarter than anticipated earlier.
Icelandair was going to purchase Wow Air but something came up and the deal won’t close as planned on November 30th (if at all). The September bond sale was supposed to cover Wow Air’s financial needs for a year but now it won’t. The airline needs more capital to continue operations.
I would be very worried if the deal with Icelandair collapses and you have tickets on Wow. It would be prudent to have alternate plans just in case the airline goes under.
It is interesting to see what will happen to Wow and if the airline is too big to to fail. The Icelandic economists have estimated that the Icelandic krona would depreciate 13% and GDP contradict 3% next year if the airline would cease to exist.
But does it make sense for the Icelandair to purchase Wow when they are not doing great either at the moment?