Wow Air has been in the search of new capital for the past months. A deal with the Indigo partners didn’t go through and Icelandair has decided not to proceed with any transaction with the troubled airline.
Wow Air had two frames repoed yesterday due to unpaid leases according to the Icelandic media; one in Montreal (airline first claimed an engine problem) and another one in Cuba.
Here’s an excerpt from Kcore (access their piece here):
There is great uncertainty about the future of the airline WOW air, but Skúli Mogensen, CEO and owner of WOW air, tries to save the airline after it broke up with negotiations with Icelandair Group yesterday. According to WOW air’s announcement yesterday, the company is now working on an agreement with the majority of its creditors that the company’s debt will be largely converted into equity and that the same parties will provide the company with funding for its operations until it reaches “sustainable future operations”.
According to sources Fréttablaðið works Arctica Finance now collecting 5 billion in additional investment to save the airline from bankruptcy but WOW air now owes about 24 billion. The morning paper today reported that WOW air loss amounted to 22 billion last year.
Here’s an excerpt from Iceland Monitor (access their piece here):
Two WOW air planes have been grounded, one in Montreal and the second in Santa Clara in Cuba. The planes were grounded on request of the company that rents the planes to WOW air.
Bookings for nine destinations have been closed on the WOW air website.
The airline is roughly $200M in debt and seems to have trouble finding investors willing to put up some cash (are their books so bad?).
The airline has already previously returned some planes and curtailed their route network. It is getting very serious for Wow Air if lessors are starting to repossess remaining planes.
All this uncertainly means that there are fewer passengers willing to purchase tickets because nobody knows if the airline exist in couple of months time.