Wow Air: Icelandic airline hands back four planes as cash crisis worsens

‘We are taking every step possible to ensure the continuous operation of WOW Air,’ wrote CEO Skuli Mogensen

Cash call: Skuli Mogensen, chief executive of Wow Air (Wow Air)

Another Icelandic-owned airline is facing a cash flow crisis after what it calls “materially worse” results.

In October Primera Air went bust, stranding tens of thousands of passengers and leaving many more out of pocket.

Now Wow Air, which flies from Gatwick, Stansted and Edinburgh to Reykjavik with onward connections to North America, has admitted that its results are “materially worse than originally anticipated”.

Skuli Mogensen, the airline’s chief executive, has written to bondholders saying “a number of external and internal events have unfortunately worsened significantly” since a bond issue in September.

He blamed Primera Air’s collapse for escalating “negativity” about Wow Air’s financial position, which he said “has further worsened an already challenged situation”.

A sale-and-leaseback deal that was expected to raise $25m (£11.7m) has been cancelled.

Mr Mogensen wrote: “Due to the continuous negative events all our lessors, creditors and authorities have been monitoring the situation even closer and demanding stricter payment terms then before further putting pressure on our cash flow.

“As a result, our Q4 results are materially worse than originally anticipated.”

A planned takeover by Wow’s bigger rival, Icelandair, has stalled. The €18m (£16m) deal was due to be approved at a shareholders´ meeting on 30 November. But Bogi Nils Bogason, Icelandair Group’s chief executive, said: “The share purchase agreement contains numerous conditions which will have to be fulfilled before the meeting.

“At this moment, Icelandair Group estimates that it is unlikely that all of the conditions will be fulfilled by that time.

“The company will continue to work on the transaction and the parties are continuing dialogue on next steps.”

The problems are believed to arise from conditions attached to Icelandair bonds worth about £160m. Four Wow Air aircraft have been returned to lessors. Two Airbus A330s, an A321 and an A320 have flown from Keflavik Airport to airports in Ireland, Italy and France.

The pair of wide-bodied A330s landed in the early hours of Wednesday morning in Lourdes Airport, which is a “graveyard” for retired planes.

The move reduces Wow Air’s fleet size by one-fifth and the number of available seats by about one quarter, as it now has only one wide-bodied Airbus left.

The Independent has sought a response from Wow Air.

Until now the carrier has competed intensively with Icelandair, especially on UK-US trips. In 2017 Wow Air publicised “London-New York flights” for £99, but none was actually available at that price.