Icelandic low Cost Airline WOW Air Goes Bankrupt, All Flights are Cancelled

Low cost airline WOW Air is bankrupt, leaving passengers stranded

AVIATION: The Icelandic low cost airline Wow Air employs a thousand people

The last victim of the Battle of the Atlantic, the low-cost Icelandic airline WOW Air ceased operations on Thursday and cancelled all flights, blocking thousands of passengers in Europe and North America.

WOW Air, which carries more than a third of travelers to Iceland , had no investors left to hope for a recovery since his compatriot Icelandair had withdrawn from negotiations for a recovery. “WOW Air has ceased operations. All WOW Air flights are cancelled, “the carrier said in a statement .

Thousands of stranded passengers

Continued strong competition from low-cost transatlantic routes and rising fuel prices have undermined WOW Air’s performance. The airline has invited passengers injured by the cancellation of flights to “check the flights available with other airlines.”

Dozens of passengers found themselves stranded early Thursday morning at Reykjavik airport, where about 30 WOW Air flights were canceled, including from or to Paris, New York and Montreal. The government estimates that 4,000 people are stranded – 1,300 of them in transit.

1,000 employees

In 2018, WOW Air, which employs a thousand people, transported 3.5 million passengers to 27 destinations in North America, Europe and Israel. But the carrier, deficit, has reduced the sails in recent months, selling planes and removing dozens of jobs.

In the first nine months of 2018, the company posted a pre-tax loss of nearly $ 42 million (€ 37 million).

Financing difficulties

Following the first withdrawal of Icelandair in the race to buy WOW Air in late 2018, the investment fund specialising in air transport Indigo Partners signed an agreement in principle to enter the capital of WOW Air to 49%. On March 21, however, the US investment company gave up its takeover bid while Iceland announced it would resume negotiations for the purchase of his compatriot … Before its final withdrawal announced Sunday.

The low cost airline had since launched discussions with its creditors to find a restructuring agreement – including the conversion of the current debt into capital. On Monday, its creditors had approved the conversion of their bonds into capital at 49% of the debt of the company, but it still had to find buyers for the remaining 51% to avoid bankruptcy .

An impact on Icelandic GDP?

“I will never forgive myself for not having acted sooner because it is obvious that WOW is an incredible airline and we are on the right track to do great things again,” wrote the CEO and founder of the company. , Skuli Mogensen, in a letter to the staff.

The bankruptcy of the carrier, founded in 2011, would result in a contraction of GDP of 3%, the fall of the crown and an increase in inflation, according to the government. Some analysts, however, consider these forecasts alarmist. The Icelandic Minister of Transport has announced to the press the launch of an emergency plan for travelers stranded at airports, without giving further details.

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