WOW Indeed: Icelandair to Acquire Struggling WOW Air
It's been a rough end of the year for WOW Air. After quickly expanding to markets across the US, the ultra-low-cost carrier has cancelled a slew of routes as fuel prices have increased and routes haven't performed as well as expected. New York's JFK, Dallas, St. Louis, Cleveland, Cincinnati and Tel Aviv routes have been causalities of WOW Air's retraction so far.
[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.]
Perhaps on the verge of going under -- as we saw fellow transatlantic low-cost carrier Primera Air fail in October -- WOW Air seems to have found a savior right in its own backyard. Fellow Icelandic low-cost carrier Icelandair is acquiring WOW Air. Current WOW Air shareholders will receive a 5.4% stake in the resulting Icelandair Group.
Before this deal is completed, it must be approved at an Icelandair Group stockholders meeting and get regulatory clearance from the Icelandic Competition Authority.
As part of the announcement, Icelandair Group CEO Bogi Nils Bogason confirms that the two airlines will "continue to operate under their own brands and operating approvals." However, combining forces would allow the two airlines to divvy up markets to see where Icelandair's slightly more premium service or WOW Air's bare-bones fee-heavy service -- or both -- makes the most sense. Or, in corporate speak, this deal will offer "many opportunities for synergies with the two companies."
The approval from Icelandair Group shareholders might be a shoo-in given the stock market's reaction to the news. Before the deal was announced, a 5.4% stake (272,341,867 shares) in the Icelandair Group was worth 2.18 billion Krona (USD $18 million). However, with the Icelandair Group stock currently up as much at 50% in trading Monday, the value WOW Air's shareholders would get from the deal has also surged 50%.
While both Icelandair and WOW Air have made a splash on transatlantic market with their surprisingly-low fares, the two Icelandic airlines currently only account for a combined 3.8% share of the transaltantic market -- with legacy airlines still controlling most of the lift.
This post has been updated with a corrected currency exchange rate.
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