What Does Indigo See In WOW Air?

It has been quite the rollercoaster ride for Iceland’s WOW Air in the last couple of weeks.  After seeing its acquisition by Icelandair fall through, it seemed like WOW might be heading toward the graveyard.  Yet just as things looked their bleakest, a white knight — Indigo Partners — arrived to bail the airline out.  I’m trying to figure out why.

via
/

You’ll remember that it was less than a month ago that Icelandair had agreed to purchase WOW for almost nothing.  WOW had grown quickly with its ultra low cost carrier model from its Keflavik hub in Iceland.  But its growth was chaotic with some questionable decisions (like acquiring widebodies and flying very thin routes).  The growth continued unabated, despite big losses.  After the summer, it became clear that WOW would be in trouble, especially entering the off-peak northern winter season.  With a shut down possible, the Icelandair deal showed up at the right time.

I thought this was a great deal.  For Icelandair, it would eliminate a competitor and swiftly rationalize capacity in Iceland.  For WOW, well, it would give the airline’s owner at least something to show for his wild growth plan.  It was better than failing. 

Then the deal hit a snag.  That snag?  The wheels fell off the business.  As , pretty much everything went wrong.  Or, at least, the problems accelerated.  It recently had to return four airplanes to lessors including two of its three widebodies just to stay afloat.  In the end, WOW wasn’t able to hold up its end of the bargain, so the .  

At this point, it seemed like just a matter of time before WOW shut down.  Then Indigo Partners swooped in.  We don’t know details, but .  Assuming the deal closes, WOW will have gotten very lucky here.  And Icelandair, well, it can’t be happy.

So just what is Indigo thinking?  Indigo, as you may know, is run by Bill Franke, former CEO of America West.  Indigo used to own a piece of Spirit until it decided to invest in Frontier instead.  It also owns or has owned pieces of other ultra low cost carriers around the world, including — most notably for this story — Wizz Air in Eastern Europe. 

Indigo is very familiar with one of WOW’s board members, former Spirit CEO Ben Baldanza.  [Update: It appears from the WOW website that Ben has stepped off the board.]  So it must see something promising in the ashes of this mess.  Franke said this:

We have a strategic vision for the airline, and look forward to working with its employees and agents to deliver that vision

Just what that vision is remains the biggest question.  Indigo has seen great success with Wizz in Europe.  That airline flies Airbus narrowbodies and has grown dramatically in recent years.  Unlike WOW, it has grown profitably.  Maybe Indigo wants to take WOW back to its roots flying those same Airbus narrowbodies east and west from Iceland, fitting it into the mold that has done so well for Wizz.  The airline could also benefit from connectivity with Wizz in Europe and potentially Frontier in the US.  Could that be the plan?

It’s safe to assume that we won’t know for sure until the deal closes… IF the deal closes.  But Indigo doesn’t just throw money at failing airlines to prop them up.   It has to have a plan. 

(Visited 2,698 times, 1 visits today)

Get Posts via Email When They Go Live or in a Weekly Digest


www.buysteroids.in.ua

бойлер косвенного нагрева купить цена

binitattoo.com/permanent-makeup/
Do NOT follow this link or you will be banned from the site!