The Icelandic flag carrier is cancelling its planned purchase of its low-cost competitor at the last minute.
Icelandair is unable to complete the purchase of WOW air within the agreed deadline, it has emerged today, and WOW air has now lost its desperately needed rescue plan.
The Icelandic flag carrier is cancelling its planned purchase of its competitor at the last minute, and the signed purchase agreement dated November 5 will not be effective.
Icelandair made the announcement Thursday morning in a stock exchange release.
The cancellation of the deal is due to the fact that it will not, as previously reported, be possible in time for an extraordinary general meeting set for November 30 to fulfil all the terms of the agreement.
The Board of Directors of Icelandair did not want to postpone the decision to take over the competitor any longer.
“Icelandair’s planned acquisition of WOW air will not go through,” said Icelandair CEO Nils Bogason in a press release.
“The Board of Directors and management of both companies have worked on this project in earnest. This conclusion is certainly disappointing. We want to thank WOW air‘s management for a good cooperation in the project during recent weeks. All our best wishes go out to the owners and staff of the WOW air.”
This last statement sounds ominous for WOW air. The cancellation is the worst-case scenario for the budget carrier, which is in a very serious liquidity gap.
Earlier this week, it had decided to send four of its 20 aircraft back to leasing companies, and the company is short of at least US$25 million.
“It was clear at the outset that it was an ambitious task to complete all the conditions of the share purchase agreement in this short period,” admits Skúli Mogensen, CEO and owner of WOW air.
“We thank the Icelandair Group’s management team for this challenging project, and also wish the management and staff of Icelandair Group all the best.”
Icelandair will still go ahead with Friday’s extraordinary general meeting in relation to an announced capital increase in the company.