The future for Iceland’s low-cost carrier WOW Air looks bleak with Icelandair Group scrapping plans to buy out the struggling airline.
Icelandair confirmed that conditions for the share purchase were “unlikely” to be filled by the company’s shareholder meeting November 30, 2018.
WOW Air first took to the air in 2012 as a no-frills budget airline offering low airfares, but charged for carry-on luggage, food and drinks. However, escalating financial problems began to take their toll after a bond issuance in September, the Icelandic carrier struggling to deal with rising fuel costs. Subsequent to this, aircraft lessors and the company’s creditors “demanded stricter payment terms than before, putting further pressure on the company’s cash flow,” WOW air said in a statement on November 27.
The airline expanded rapidly, helping to fuel a tourism boom to Iceland, but has been beset by other problems including accusations of poor customer service. “We have to do better,” CEO Skuli Mogensen told CNBC in an interview in June in Reykjavik. “It’s obviously in our interest to fix it.” He made it clear that canceled flights, delays and other problems cost the airline dearly in terms of passenger compensation.
While the airline reduced its fleet of aircraft by four earlier this week, there are no clear indication as to what WOW Air will do next.
