The bizarre backing behind WOW Air, redux

What do cargo operations in Djibouti, negotiations with Somali pirates, and covert intelligence operations have to do with a failed Icelandic airline? Michele Ballarin is about to show us all.

Ballarin was revealed as the American behind the purchase of WOW Air’s assets earlier this month and her history is an interesting one. She negotiated with Somali pirates to end a standoff in 2008 and has spent years supporting a Sufi resistance to Wahhabi militants in the country. She also approached the Pentagon, CIA and others with plans to help fight the battles on the ground. Not much progress was made on that front, though one contract was signed and paid by the Pentagon.

Since then she’s been involved in setting up Air Djibouti and a cargo carrier Oasis Air Services flying between Dulles and Djibouti. Now Ballarin wants to bring WOW Air back to life.

Read More: WOW Air assets sold to investors

Among the ways the company can save money, Ballarin identified a reduced IT staff and limiting the complimentary employee transportation from downtown Reykjavik to Keflavik airport. She also believes that significant savings can be realized by trimming the compensation paid to passengers. Presumably that would happen by not canceling flights, losing bags or otherwise screwing up in ways that EC laws require the compensation to be paid, rather than simply avoiding that obligation.

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Ballarin also believes that the operation can profit through a focus on cargo services. That cargo market growth is slowing and that the Transatlantic market is particularly saturated on that front does not see to faze her. The cargo capacity of the planes is also spectacularly limited given the route profile.

She is promising as much as $100mm in capital to the operation, but the early moves may have already hit a snag. Despite promises earlier in the month that the funds to purchase WOW’s assets had cleared, reports this week suggest that the money was not delivered. When and how that will happen remains unclear.

Read More: WOW Air halts operations; all flights canceled

So, too, does the ownership structure plans for the company. Icelandic law requires a 51% stake to be held by locals and Ballarin does not qualify. She promises a partner company from the island nation will be in position but the timing and management positioning there remains unclear. Without that in place the operating certificate will not be issued.

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Assuming the new operation takes off – and that remains a significant assumption – WOW 2 will operate very similarly to the original. A small fleet of A320 family aircraft will return to service, connecting destinations in the US and Europe via a hub in Keflavik. Perhaps Dulles will join the route map given Ballarin’s other interests with airlines there.

That former partners reported investing their own cash only to see operations shut down and monies lost should be a red flag. So, too, might be the complex structure under which Oasis Air Services operates. Or even the part where the business plan for the revitalized WOW depends on not changing much, at least not in a manner that would be profitable.

And then there’s the money again. Where will the Icelandic ownership come from? And can she really be trusted to pony up her side of the financial commitment? Perhaps we will see soon enough. And perhaps not at all.