WOW Air came closer to being a statistic in the long running saga of European airline consolidation yesterday.
The process was triggered by Icelandair being unable to raise enough money through bond sales, and in turn saying it couldn’t complete the all-share purchase of WOW, leaving the later in a dire financial situation.
WOW has been living on future receipts from ticket sales, which in itself is not uncommon, it simply depends how close to the legal minimum of 30 days operational funds the airlines get.
WOW has seen a sharp drop in bookings, partly because of poor coverage on its financial situation, and as much from the collapse of Primera Air Group, which despite being mostly registered in the Baltic States, was controlled by an Icelandic owned travel business.
WOW is reducing its fleet by 2 A320’s and 2 A330’s – “in cooperation with its lessors” – it owns no aircraft and has few assets, and started using phrases like “maximizing the utility” of its remaining fleet, which is always a sign of aberrant panic and a desperate effort to stave off mounting losses.
The airline admitted that both the authorities and its creditors were now monitoring it far more closely, it was being asked to pay on time or even up front for goods and services, all of which have severely affected its cash flow.
Even the drop in oil prices, which should have mitigated the problems a little has failed to help.
Sadly the future of WOW now looks in serious doubt unless an investor can be found. It also puts in jeopardy the order for four A339neo’s set to be delivered by Avolon next year.