Does Wow Air Have a New Financial Savior?
Don't count Wow Air out just yet.
[Update, 3/28/2019: WOW Air has ceased operations. Find our ongoing coverage of WOW Air's collapse, and what affected passengers can do about it, here.]
Even though the struggling ultra-low-cost carrier has been cutting routes, selling off 20% of its fleet and attempting to negotiate a failed buyout from Icelandair, it might have found a new financial savior willing to step up in the nick of time to save the airline from a seemingly imminent demise.
Indigo Partners, the private equity firm that owns budget airline Frontier, said Thursday it plans to buy a stake in the faltering Reykjavik-based carrier. The two aviation groups said they have reached a preliminary agreement, the specific terms of which were not disclosed. But if the deal goes through after due diligence, Wow's CEO Skuli Mogensen would remain the airline's primary shareholder.
National flag carrier Icelandair had originally offered to buy Wow, but its preliminary purchase agreement laid out several stipulations that the purple-liveried carrier had to complete by the Icelandair shareholders' meeting on Nov. 30 or the deal would not go through. And it seems that Wow wasn't able to hold up its end of the bargain.
Now the question is whether the airline's shaky balance sheets, exacerbated by the recent record-high cost of jet fuel, will pass Indigo Partners' due diligence.
If it can manage to cement the private equity investment, Wow will be in capable hands.
Indigo Partners not only owns Frontier, but also invested in fellow ULCC Spirit Airlines when it was struggling, and is widely credited with turning around the airline's bottom line. Spirit is now one of the most profitable airlines in the ultra-budget sector, posting a third quarter net income of $97.5 million in 2018.
"We have a strategic vision for [Wow], and look forward to working with its employees and agents to deliver that vision," Bill Franke, managing partner of Indigo Partners, said in a statement.
The firm is also currently a lead investor in international ultra-low-cost carriers Wizz Air, Volairs and JetSMART.
TPG featured card
at Capital One's secure site
Terms & restrictions apply. See rates & fees.
| 5X miles | Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel |
| 2X miles | Earn unlimited 2X miles on every purchase, every day |
Pros
- Stellar welcome offer of 75,000 miles after spending $4,000 on purchases in the first three months from account opening. Plus, a $250 Capital One Travel credit to use in your first cardholder year upon account opening.
- You'll earn 2 miles per dollar on every purchase, which means you won't have to worry about memorizing bonus categories
- Rewards are versatile and can be redeemed for a statement credit or transferred to Capital One’s transfer partners
Cons
- Highest bonus-earning categories only on travel booked via Capital One Travel
- LIMITED-TIME OFFER: Enjoy $250 to use on Capital One Travel in your first cardholder year, plus earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening - that’s equal to $1,000 in travel
- Earn unlimited 2X miles on every purchase, every day
- Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel
- Miles won't expire for the life of the account and there's no limit to how many you can earn
- Receive up to a $120 credit for Global Entry or TSA PreCheck®
- Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
- Enjoy a $50 experience credit and other premium benefits with every hotel and vacation rental booked from the Lifestyle Collection
- Transfer your miles to your choice of 15+ travel loyalty programs
- Top rated mobile app