The Icelandair Group has decided that its possible involvement in Icelandic low-cost airline WOW air’s operations will not materialize. Therefore, all discussions between the parties have ended.
Last week, Icelandair said that its Board of Directors had agreed to start discussions with WOW air regarding the group’s involvement in its operations, following the announcement from WOW air on the end of negotiations with Indigo Partners.
“The discussions will be based on the doctrine of competition law regarding the failing firm defense. The discussions will take place in cooperation with the Icelandic authorities”, the Icelandair Group said in a statement.
Icelandair had previously agreed to buy WOW Air but ditched those plans on November 29.
Founded in 2011, WOW air took advantage of Iceland’s location in the middle of the North Atlantic to offer a low-cost service between Europe and North America as well as tapping into a tourist boom to the island. However, the privately-owned airline posted a pre-tax loss of almost $42 million for the first nine months of 2018.
The airline has undergone a major restructuring in a bid to ensure its survival, reducing its fleet from 20 to 11 aircraft, eliminating several destinations, including those to the United States, and cutting 111 full-time jobs.
When asked by the Aviation Tribune for comment, WOW air’s spokesperson said:
“A majority of WOW air Bond Holders and other creditors of WOW air are in advance discussions with the aim of reaching an agreement on a voluntary restructuring including an agreement of converting current debt into equity and fund the company towards long term sustainability.”