Icelandair reached an agreement earlier this month to purchase struggling Icelandic discount airline Wow Air for $18 million (read more here) pending certain conditions and shareholder approval.
Yesterday, Icelandair informed that the purchase was delayed (read more here) and today the airlines issued a joint statement that the purchase was called off entirely.
Here’s the press release from Icelandair:
Icelandair Group’s acquisition of Wow air cancelled
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. An authorisation proposal for the Board to increase the share capital of Icelandair Group is on the agenda of the shareholders’ meeting.
Bogi Nils Bogason, Interim President & CEO of Icelandair Group:
“The planned acquisition of Icelandair Group of Wow air will not go through. The Board of Directors and management of both companies have worked on this project in earnest. This conclusion is certainly disappointing. We want to thank WOW air‘s management for a good cooperation in the project during recent weeks . All our best wishes go out to the owners and staff of the Wow air. ”
Skúli Mogensen, CEO and Founder of Wow air:
“It was clear at the outset that it was an ambitious task to complete all the conditions of the share purchase agreement in this short period. We thank the Icelandair Group’s management team for this challenging project, and also wish the management and staff of Icelandair Group all the best.”
We are certainly living interesting times when it comes to the future (survival) of Wow Air. Just yesterday the airline sent four frames (two A330’s and two A320’s) back to lessors and the CEO was trying to reassure employees that they would get paid this Friday (read more here).
Flying passengers transatlantic is not an easy business (many have tried and failed) and competition is fierce. There is not much money to be made on those much advertised $99 fares unless you can sell plenty of extras.
Let’s hope that the airline can find its way out from the current financial difficulties. Passengers who have tickets on Wow, however, should be ready to make alternate travel plans in a case that the airline folds.