Icelandair Group to take over Wow Air
Icelandair Group has announced it will take possession of the entire share capital of Wow Air, who has been Iceland’s budget carrier since 2011.
The acquisition of the share capitol is completely subject to approval from Icelandair Group shareholders as well as the Icelandic Competition Authorities.
Wow Air has been struggling for some time now so this new agreement brings a sigh of relief to those involved with the airline, at least ensuring it remains in place for now. Providing they meet the requirements, Wow Air shareholders will receive 272,341,867 shares as an exchange for their existing Wow Air shares, which is equivalent to 5.4% of the Icelandair Group’s stock.
Each company will continue to operate under their own branding, however the agreement will allow the companies to expand to new destinations and develop as a stronger player in the Atlantic market. Currently, the combined market share between the two is 3.8%.
CEO and founder of Wow Air, Skúli Mogensen, reflects on the deal in part of his statement to the public:
“A new chapter starts where WOW Air gets an opportunity to grow and prosper with a strong backer like Icelandic Group that will strengthen the foundations of the company and strengthen its international competitiveness event further”
Icelandair Group will host a shareholder meeting in the near future to discuss and make a firm decision on the purchase of Wow Air.
As mentioned above, Wow Air has been struggling financially for a while now and recently had to drop some routes. The delay of their upcoming Airbus A330neo has also caused problems for scheduling and route planning. Icelandair, who is in a slightly more comfortable position, has been focusing on trimming its expenditure by selling its hotel operations. Both airlines are expected to or are in the process of receiving new aircraft, which will ultimately help the group (if approved) rapidly expand.
More news to come as meetings progress and additional information emerges.