Earlier in the week an investment group stepped forward with plans to rename bankrupt Icelandic airline WOW Air to WAB and relaunch operations. That plan may be preempted by a different investment group, however. Icelandic media now reports that “an American aircraft operator has purchased all assets related to flight operations from the bankrupt estate of WoW air – paying handsomely and in full, up-front.” With those assets in hand the unnamed investors could be in a position to return to flight quickly.
While names of the investors are not being released the bankruptcy administrator confirms that the transaction completed. With everything from flight manuals to spare parts to uniforms to the online branding experiences covered, a new owner would be well suited for a quick return to the skies. Securing aircraft leases and an operating certificate would still be necessary, but the other property gives the new investor a significant head start.
One potential road block in this plan comes from Icelandic law with respect to foreign ownership of an airline. Act No 34/1991 Article 4, Paragraph 3 requires that the majority of shares remain under control of the Island’s residents. Or by individuals domiciles in other European Economic Area countries.
3. The combined share of non-residents in Icelandic airline companies may not at any time exceed 49%. Individuals domiciled in another member state of the European Economic Area and legal persons there domiciled are exempted from the provisions of this subparagraph.
If the investment truly is from an American company this poses a problem for the operation.
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Even with the transaction completed there is no guarantee of a return to flight for the bright pink planes. More than once in history a bankrupt airline’s marketing assets have changed hands without a successful relaunch. Though with this deal including spare parts and flight operations manuals, the odds are somewhat higher.
And, unlike the news earlier this week, details on this transaction are confirmed as completed and not dependent on additional outside financing, at least at this step. If the investors need local shareholders to join their operation that could change the financial demands of the deal.
Also, the risk and uncertainty of the transatlantic market has not improved much since the carrier collapsed. A slower growth trajectory might give better chances for success, but that is far from a certainty.
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If they bought the assets but not the company itself, maybe this won’t be an Iceland-based airline anymore? The brand name is not tied to country/location and could potentially fly anywhere and under any flag. No?
Seth Miller says
Fair point. Moving the operations (and physical assets) elsewhere would require slightly more work, but depending on the ultimate goal could still deliver.