WOW Air, the Icelandic low-cost carrier, is bankrupt. The news follows a failed acquisition by Indigo Partners, in addition to failed talks with full-service rival Icelandair. WOW has been facing financial difficulties for around five months now. In fact, the CEO of the company had to use his own money to prop it up at one point.
WOW Air’s Troubles
The first hint of trouble within WOW Air arrived in mid-October 2018. The airline began to cancel routes. This was confirmed when Icelandair entered negotiations to purchase WOW Air in early November.
Additionally, at the end of November when the Icelandair deal collapsed, WOW CEO Skúli Mogensen was forced to take action. While he injected €5.5 million of his own money into the airline, this, unfortunately, wasn’t enough to keep the airline in business. At the time he blamed the following on poor financial health:
- Bad publicity of WOW’s financial state;
- The collapse of Primera Air;
- Lessors and creditors imposing stricter terms;
- Surging oil prices.
Two failed acquisitions
There have been two failed acquisitions of WOW Air. The first, by Icelandair, fell through as WOW Air was not able to meet criteria set out prior to a shareholders meeting. The Indigo Partners talks came to an end last week.
What if I have flights booked?
Firstly, if you have flights booked with WOW Air, do not to head to the airport. Your flight will not take place as the airline has suspended all operations. WOW Air has told passengers to “check available flights with other airlines.” While also mentioning “Some airlines may offer flights at a reduced rate, so-called rescue fares, in light of the circumstances. Information on those airlines will be published, when it becomes available.”
Passengers are advised to contact their credit card issuer to see whether they may be able to get a refund on the flight tickets. Additionally, if flights are part of a package tour, they may be protected. Passengers in this circumstance are advised to contact their travel agent or tour operator.
Finally, some travel insurance packages have clauses for airline insolvency. If you have travel insurance booked for your trip, or an annual travel insurance plan, you should check to see whether you are protected in the case of airline bankruptcy. If this is the case, be sure to contact your insurance provider who will detail the next steps.